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Getting a banking license in the US at least is totally doable and lots of banks are created de novo every year. As another commenter noted, anyone can create

Getting a banking license in the US at least is totally doable and lots of banks are created de novo every year. As another commenter noted, anyone can create "money out of thin air". Come to my corner store and buy an apple on credit. Poof! Credit was the original money, made out of thin air, and can be by anyone.

kcatskcolbdi 2y ago
Everyone has their own opinion of "lots" I suppose, but the quickest info I could come by in a quick search was 8 de novo created in 2021.
- danielmarkbruce 2y ago
  Yup it's in the ~10's every year more or less.
- ianwalter 2y ago
  Sure, but because of fintech not as many need to get created. Fintech has made it relatively easy for new entrants to work with partner banks through BaaS platforms.
Red_Comet_88 2y ago
Can your corner store credit be used to pay taxes? How long will your corner store survive if the IRS found out you were processing transactions in your own currency?
- danielmarkbruce 2y ago
  No to paying taxes, mostly because the asset you'd have is an apple... The corner store at least has a receivable, but the IRS still won't accept that from them. But, at least in the US, before the national bank acts in the 1800's, various taxing entities specified which bank notes (or other assets) they'd accept and not accept. It was basically whichever bank notes circulated the most with no/little discount, some gold/silver coins, some government bonds. Ie acceptance by a taxing entity isn't really a clear line on "is/is not" money. Trading receivables has been going on forever, happens today, is totally legal. The corner store could sell the receivable, and many businesses to sell their receivables.
- snitty 2y ago
  >How long will your corner store survive if the IRS found out you were processing transactions in your own currency? Offering someone credit in USD isn't making your own currency. The closest widespread version of that are community currencies[0], which the US doesn't seem to particularly care about -- I'm guessing because they're generally pegged to the dollar and promote local economies. [0] https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i...
- kasey_junk 2y ago
  You didn’t say currency, you said credit. But it doesn’t matter, lots of non-US chartered institutions historically create US dollars. There are some treaties around it now but in the beginning English banks created the Eurodollar system with no control by the US government.
jdminhbg 2y ago
There used to actually be lots of new banks, now there are some: https://www.statista.com/statistics/193052/change-in-number-of-new-fdic-insured-us-commercial-bank-charters/ https://www.statista.com/statistics/193052/change-in-number-...
- owenversteeg 2y ago
  Huh, from about 150/yr from 2000-2008, not one from 2011-2016, 10/yr 2017-2023. Interesting.
jgilias 2y ago
Buying an iPhone on credit is not making money out of thin air. Unless you can fractional-reserve create iPhones.
- danielmarkbruce 2y ago
  Sure it is. In fact, it's fractional banking where the fraction is 0. Consider how much business can be done on credit, and what constrains it. Infinite, and nothing. My corner store is not required to hold reserves against it's receivable. Apple (or a telco) is not required to hold reserves against it's receivable for a phone on credit. Their suppliers aren't required to hold reserves against credit on them. And so on all the way back to the folks digging stuff out of the ground.
  - jgilias 2y ago
    Ok, what am I misunderstanding here? If I need financing of 100 pesos for buying a house, and I go to a commercial bank which has a 10% fractional reserve requirement, they'll give me 100 pesos, 90 of which will be newly created broad money. As I buy the house, and pay the 100 pesos to the seller, the 90 newly created pesos just entered the economy. If I go to your corner store and buy an Iphone on credit, you're not getting any new pesos right away, and neither am I. I could turn around, and sell the Iphone to someone, but again, that person will pay me with pesos that already exist in the system. You could argue that implicitly me wanting to buy an Iphone means that someone somewhere down the line would've used a commercial bank to take a loan and hence my activity indirectly participates in broad money creation. But that doesn't mean that buying an iPhone in a corner store on credit is exactly equivalent to taking out a loan at a commercial bank when it comes to broad money creation.
    - danielmarkbruce 2y ago
      Continue down the chain on your house example. Imagine in each case instead of transferring money in bank accounts, people do the work on credit. Add up all the credit at the end of the chain. Then go back and add up all the bank account balances in the "pay with money transfer". It'll be the same (except for the fraction). Now, go look at a bunch of public company balance sheets - you'll see payables and receivables all the way down from mining companies to retailers. One long chain of credit. They could have all borrowed money from banks instead and have zero trade receivables throughout the entire chain. The point of "money creation" is to enable economic activity. Credit does the same thing. In fact, your "money" at the bank is just a receivable from the bank. Ray Dalio has a quarter decent explanation of it here: https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0

kcatskcolbdi 2y ago

Everyone has their own opinion of "lots" I suppose, but the quickest info I could come by in a quick search was 8 de novo created in 2021.

danielmarkbruce 2y ago
Yup it's in the ~10's every year more or less.
ianwalter 2y ago
Sure, but because of fintech not as many need to get created. Fintech has made it relatively easy for new entrants to work with partner banks through BaaS platforms.

Red_Comet_88 2y ago

Can your corner store credit be used to pay taxes? How long will your corner store survive if the IRS found out you were processing transactions in your own currency?

danielmarkbruce 2y ago
No to paying taxes, mostly because the asset you'd have is an apple... The corner store at least has a receivable, but the IRS still won't accept that from them. But, at least in the US, before the national bank acts in the 1800's, various taxing entities specified which bank notes (or other assets) they'd accept and not accept. It was basically whichever bank notes circulated the most with no/little discount, some gold/silver coins, some government bonds. Ie acceptance by a taxing entity isn't really a clear line on "is/is not" money. Trading receivables has been going on forever, happens today, is totally legal. The corner store could sell the receivable, and many businesses to sell their receivables.
snitty 2y ago
>How long will your corner store survive if the IRS found out you were processing transactions in your own currency? Offering someone credit in USD isn't making your own currency. The closest widespread version of that are community currencies[0], which the US doesn't seem to particularly care about -- I'm guessing because they're generally pegged to the dollar and promote local economies. [0] https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i...
kasey_junk 2y ago
You didn’t say currency, you said credit. But it doesn’t matter, lots of non-US chartered institutions historically create US dollars. There are some treaties around it now but in the beginning English banks created the Eurodollar system with no control by the US government.

jdminhbg 2y ago

There used to actually be lots of new banks, now there are some: https://www.statista.com/statistics/193052/change-in-number-of-new-fdic-insured-us-commercial-bank-charters/ https://www.statista.com/statistics/193052/change-in-number-...

owenversteeg 2y ago
Huh, from about 150/yr from 2000-2008, not one from 2011-2016, 10/yr 2017-2023. Interesting.

jgilias 2y ago

Buying an iPhone on credit is not making money out of thin air. Unless you can fractional-reserve create iPhones.

danielmarkbruce 2y ago
Sure it is. In fact, it's fractional banking where the fraction is 0. Consider how much business can be done on credit, and what constrains it. Infinite, and nothing. My corner store is not required to hold reserves against it's receivable. Apple (or a telco) is not required to hold reserves against it's receivable for a phone on credit. Their suppliers aren't required to hold reserves against credit on them. And so on all the way back to the folks digging stuff out of the ground.
- jgilias 2y ago
  Ok, what am I misunderstanding here? If I need financing of 100 pesos for buying a house, and I go to a commercial bank which has a 10% fractional reserve requirement, they'll give me 100 pesos, 90 of which will be newly created broad money. As I buy the house, and pay the 100 pesos to the seller, the 90 newly created pesos just entered the economy. If I go to your corner store and buy an Iphone on credit, you're not getting any new pesos right away, and neither am I. I could turn around, and sell the Iphone to someone, but again, that person will pay me with pesos that already exist in the system. You could argue that implicitly me wanting to buy an Iphone means that someone somewhere down the line would've used a commercial bank to take a loan and hence my activity indirectly participates in broad money creation. But that doesn't mean that buying an iPhone in a corner store on credit is exactly equivalent to taking out a loan at a commercial bank when it comes to broad money creation.
  - danielmarkbruce 2y ago
    Continue down the chain on your house example. Imagine in each case instead of transferring money in bank accounts, people do the work on credit. Add up all the credit at the end of the chain. Then go back and add up all the bank account balances in the "pay with money transfer". It'll be the same (except for the fraction). Now, go look at a bunch of public company balance sheets - you'll see payables and receivables all the way down from mining companies to retailers. One long chain of credit. They could have all borrowed money from banks instead and have zero trade receivables throughout the entire chain. The point of "money creation" is to enable economic activity. Credit does the same thing. In fact, your "money" at the bank is just a receivable from the bank. Ray Dalio has a quarter decent explanation of it here: https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0