Comments by "" (@craigkdillon) on "Extra History" channel.

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  82. Good info, but you left out a lot.... a whole lot... 1. Paper "money" is NOT money === It is currency. Money is broader, and includes deposits, IOU's, etc. 2. Modern currencies are NOT backed by bullion of any kind. So, what backs them??? YOU did NOT answer that question. 3. You needed to go further into FRACTIONAL LENDING, for that is both how money is CREATED and BACKED. The dollar is backed by ALL the outstanding loans denominated in dollars. This is how it goes...... Say a bank has $100,000 in its vaults, and it must keep 10% reserve, so it could lend out $1,000,000 You are buying a house, for $250,000 with $50,000, and you need to borrow $200,000. The bank lends you $200,000, AND puts the house on its books as the mortgagor. Its assets are now $100,000 + one house valued at $250,000, while mortgagee has $200,000 -- new money that did NOT exist before the purchase and loan. It could do this four more times, and create total of $1,000,000. Its books would read $100,000 + 5 homes valued at $1,250,000 total, with outstanding loans of $1,000,000 to be collected. Meanwhile, 5 people would have $1,000,000 of spendable cash that did not exist before they bought and mortgaged the homes. Now, all lending has the same affect, even unsecured loans. Although, since the only value in the transaction is the loan itself, these loans have much higher interest rates. That is how money is both CREATED and BACKED in the US. This is also why we can NEVER go back to bullion backed currency. If we did, money supply would crash, companies would fold, and people thrown out of work, and the government have no money to help people. Our whole economic system would stop. Millions would die.
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