This is the concept I think a lot of even Bitcoin economics thinkers miss. It seems like a left curve, right curve meme type of concept. Left curve grug thinking is "the dollar is just fiat paper backed by nothing, the government just prints it."

Right curve giga brain is exactly what you're describing. Base money is now no longer gold, it's literally paper banknotes printed by the Treasury at request of the Fed. The Fed is a legalized banking cartel. Base money is physical cash, and reserve balances held by banks at the Fed. Reserve balances are digital cash, which can be exchanged for physical cash when banks request it. Final settlement is handing someone a physical banknote. That banknote is not backed by anything, and is a bearer asset with no claim on anything else. It's purely fiat money.

The huge midwit middle group are all in the weeds with the fact that commercial banks create credit that's used as money and use Treasuries and other debt instruments as collateral. That leads to people like Nik Bhatia getting so much right, but then calling Treasuries the base layer of the monetary system. They get so deep in the weeds of the debt system and global banking that it probably seems too simple to acknowledge that the whole pyramid is built on top of those green banknotes in your wallet. There really is no deeper and more complex layer than that, and all the debt instruments used as collateral have value because at the end of the day, if the borrower doesn't default, you can get green banknotes in your hand in payment.

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