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It isn't really different from normal banking. Banks are allowed to create money by issuing debt, and the loan agreement itself works as the reserve for the iss
by Geee 5y ago
It isn't really different from normal banking. Banks are allowed to create money by issuing debt, and the loan agreement itself works as the reserve for the issued currency.
In both cases the thing doesn't blow up if the debt is collateralized with something that keeps appreciating against inflation. It can go on forever, but people whose savings are decimated might get angry at some point.
- kevingadd 5y agoNormal banking is heavily regulated to a degree that does not apply here, that's why it's different. (Perhaps not heavily enough)