It’s all 1s and 0s Todd.
Fractional reserve banking.
A lot of is magicked out of thin air.
It’s a crumby system in my opinion and one that will collapse.
It always has in history if you look at the last few thousand years.
Fiat money they call it. Money out of thin air.
Griffin is not wrong. His book is a seminal book.
It’s a complex topic...
Also you might want to check out “End The Fed” by Ron Paul.
A lot of is magicked out of thin air.
Every loan is fully funded. Not magic.
It’s a crumby system in my opinion and one that will collapse.
It existed under gold and silver standards. Not magic.
Griffin is not wrong. His book is a seminal book.
His claim that a default causes no loss, "since most of the money originally was created out of nothing" is beyond moronic.
According to Von Mises fractional reserve banking is the very definition of all banking. You can find this explained in his “The Theory of Money and Credit”.
When Mises wrote that circa 1912 “money” = specie, i.e. gold. “Credit” was either bank notes printed by banks themselves or checking and savings deposits.
Banks have always created “credit money” in excess of their reserves. That goes back centuries before the Fed or any other central bank came into existence.
” there is little of tangible value that is actually lost. It is primarily a bookkeeping entry”
I guess that sounds like it makes sense if you don’t know how banks work. A loan is an asset for a bank, and a defaulted loan blows a hole in their assets. A loss of assets forces banks to contract their credit. On a wide enough level this can contract the nation’s money supply, which happened on a huge scale 1930-1933, and was a worry in 2008.
People who fall for Griffin’s foolishness appear to know nothing about how America’s banking operated before the Fed. J.P. Morgan was America’s defacto central bank. He arguably had even more concentrated power than the Fed has. Presidents used to take the train up to NYC and ask Morgan to bail out the country.
After the 1907 Panic, Morgan warned that the US financial system was getting too big for one bank to backstop. It was Morgan himself who proposed the National Monetary Commission created by the Aldrich–Vreeland Act of 1908. Their study report eventually led to the Federal Reserve Act.
The issues some critics have with the Fed started under the National Bank Act of 1863, which Lincoln used to finance the Civil War. That act forced banks to buy Treasury debt to hold as their reserves. The Fed basically kept that same framework intact.
A serious rival to the monetary/banking system that we have used since 1863 could be “asset currency”. The banking cartel may have killed the idea. George Selgin has written about asset currency for those whose eyes don’t glaze over when reading banking and monetary arcana.