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Printing money is but one way to create and it's not how most USD is created. Most USD is created by banks, and not the federal bank, whenever they give out loa
by jordigh 12y ago
Printing money is but one way to create and it's not how most USD is created. Most USD is created by banks, and not the federal bank, whenever they give out loans. This is the basis of fractional reserve banking.
- akgerber 12y ago'Printing money' is, in the context of the Fed, a metaphor for incrementing numbers on bank computers.
- jordigh 12y agoBut the fed isn't the only one who can increase the supply, is my point. Any bank can do this.
- praxulus 12y agoThere's a pretty big difference between increasing the money supply by loaning money, borrowing from the fed at the discount window, and creating money out of thin air to use however you'd like.
- depoll 12y agoWhile that's true, isn't the exact same true of any currency (including BTC)? In principle, a bank could loan BTC with a fractional reserve and produce the same outcome, could it not?
- jordigh 12y agoI suppose banks could create some sort of financial instrument that says "IOU 2.5 BTC" or whatever, but this thing they create couldn't pass off completely as bitcoins, since you couldn't spend this thing on the blockchain like you can with ordinary bitcoins. Maybe this will happen. Who knows.