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Say I gave him an IOU for a dollar. When he goes to the supermarket, they will accept the IOU. So will the gas station, his landlord or anybody else he does bus
by rags2riches 7y ago
Say I gave him an IOU for a dollar. When he goes to the supermarket, they will accept the IOU. So will the gas station, his landlord or anybody else he does business with. Their banks will also accept my IOUs. They have all accepted my IOUs before. They all have, or know people who have, converted my IOUs to hard cash before.
The IOU is an account balance. Have I created money?
- JumpCrisscross 7y ago> Say I gave him an IOU for a dollar...Have I created money? Technically speaking, yes! (Neat, huh?) If the IOU is accepted as currency, that is. You have rights to the original dollar and the borrower has rights to the IOU. Practically speaking, however, you haven't created money because nobody treats your IOU as money. (Side note: this isn't a stupid question and doesn't deserve to be downvoted.)
- rags2riches 7y agoYes, that was my point. To spell it out: the whole difference is who will accept the IOU. When everyone will, that's money.