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That money in the bank is money the bank does lend to someone

Loanable funds fallacy.

In the real world, banks create credit when someone borrows from them. They then turn around and get the central bank to sign off on that credit, thus turning it into legal tender.

There is no reason, save atavistic tradition, to even house deposit-taking and lending in the same institution.

Money is the abstraction of wealth and value, and a great facilitator for every kind of economics.

Money is an abstract representation of state power. An important point of being a sovereign state is that you reserve the right to revoke this power from foreign parties (either through strategic default or inflation) arbitrarily and without notice.

That's what "sovereignty" means: That you reserve the right to revoke political commitments to foreign entities.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:29:38 PM EST
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