Comments by "Andrew Sainsbury" (@andyinsuffolk) on "How banks create money" video.

This is just a description about how fiat state currency is used. The question is can we do better; having a tiny number of corporations licensed by the state to create a virtual commodity out of thin air with the state coercing everyone to use it may have developed as a standard but most of that history was ruled by rampant gangsterism. In a free democracy we pay opaque taxes having the state skimming every transaction again is almost certainly detrimental to the economy. We don't even have to make dramatic changes - just free-up accounting/tax practice and see what happens. Only vested interest and poilticians will resist as it will curtail their freedoms but we are supposed to be crawling towards freedom & democracy for all.
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@stephfoxwell4620 - Fractional reserve banking may have served some historical purpose - the idea that we need the state to hand out licenses now so that middle-men can make money renting something they haven't got is pure institutionalised corruption. Doing something for centuries doesn't make it optimal. With modern communications we can make better transactional models BUT politicians would lose their freedom to direct currency - and we know our masters must be free to rule.
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Some of them will understand the mechanism and will be legitimately criticising the outcome. At the very least state money creation allows distortion of the economy towards those areas the government prioritise whilst passing any risk to the people who use the currency daily. Politicians are notoriously wasteful so 'printing more money' has a high risk of being detrimental for all. If all they did was 'print money' for universally agreed standard expenses and balanced it with tax receipts then risks would be minimal.
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@ianstevenson3628 - if politicians borrow/create money to fund their preferences they are forcefully using up resource capacity that might have been more usefully employed - distortion. If they use real tax revenue they are competing with other uses - less distortion. Bank loan money creation has the same problem; corporate borrowing does not.
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@perkinscrane - GB was against fractional reserve state fiat currency? -- seems odd. Richard Murphy is a fan as it supports the big-state magic money tree -- state spending without real-money constraints.
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