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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Don Lloyd who wrote (11739)12/9/2001 11:27:36 AM
From: Ilaine  Read Replies (3) of 74559
 
What I said is that, under 100% fractional reserves, banks can't create credit. Anyone can loan (saved) money if they are willing to forego consumption. That's not creating credit.

I assume that you don't have a problem with paper money or electronic money, you just have a problem with fiat (unbacked) money.

But a promise to pay is backing - the issue is merely how good the promise is.

And illiquid wealth, e.g., real property, is also backing.

There's nothing magic about gold that makes it better backing than real estate or timber or a wheat crop, except risk, and interest rates include premiums for risk.
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