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This is going to sound weird but even if it was actual coins (say) would that make the whole thing any more "real"? Either way it's a symbolic system and it do
by xyzzy123 2y ago
This is going to sound weird but even if it was actual coins (say) would that make the whole thing any more "real"?
Either way it's a symbolic system and it doesn't really matter if you execute it on an abacus, or in a digital computer, or by writing in a book and carting bags of coins around.
I think the parts that are missing from most people's mental model are things like the role of the central bank, and the fact that lending limits are influenced but not determined by deposits.
- JonChesterfield 2y agoYes, physical coins or grams of gold or whatever are more real. Primarily because they add inertia to changing the float, it takes time to find more gold or make more coins. You can't 10x the supply overnight. Things changing more slowly damps out oscillations.
- globular-toast 2y ago> This is going to sound weird but even if it was actual coins (say) would that make the whole thing any more "real"? Yes, because then there would be a physical limit on what banks can do. They would have to invent cloning machines or alchemy or whatever to do what they currently do. In other words, it would force bank to actually do the model most people (including the author) have in their heads, namely a bank stores cash and lends it out (called fractional reserve banking). In reality, without any such physical constraints, the banks are essentially free to "create" money out of thin air by issuing loans. That's how the money supply became 99% "bank money" and only ~1% physical money.