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> As long as you're trustworthy As long as I'm trustworthy and always have an actual $10 to back the IOU. Which the bank does not have to have, according to th
by civilized 4y ago
> As long as you're trustworthy
As long as I'm trustworthy and always have an actual $10 to back the IOU. Which the bank does not have to have, according to this article.
- bryanlarsen 4y agoIt's a post dated cheque. Usually those are written because you explicitly don't have $10 today, but expect to in the future. In other words, exactly like the bank. They don't have $10 today, but expect to be able to produce it on demand because of the staggered nature of withdrawals.
- civilized 4y agoYeah, I think I get it now, thank you. I just wish the article would point out that bank deposits aren't the same as currency and are more like IOUs or post-dated checks. I understand how it can be useful to call both currency and bank deposits money, but they're still different in some very important ways. If I give my friend a trillion dollar IOU, that's very different from (1) the government printing a trillion dollars in currency and writing people checks with it, (2) the central bank crediting a commercial bank with a trillion dollar deposit. Actually I'm a little unsure what to think about the second one. Illuminating that one could help us get to the heart of the matter.