| json_metadata | "{"app":"Musing","appTags":["question","banking","money",""],"appCategory":"question","appTitle":"Why is fractional-reserve banking not illegal?","appBody":"<p>It's a very good question. It started out many many centuries ago when some goldsmiths who specialized in holding gold on their customers' behalf noticed that it almost never occurs that all customers come to get their gold at the same time. They started to give deposit certificates in excess of the actual gold they had in their vaults. This increased the money supply and benefited the economy in some ways but created the risk of a bank run. </p>\n<p>Fractional reserve banking combined with the gold standard isn't fundamentally any different from what Tether is accused of doing: printing USDT out of thin air as in not having enough cash in the bank to back up each USDT issued. Nowadays when the gold standard has been given up for, fiat money has no backing whatsoever except its status as legal tender which means, among other things, that the government demands all taxes to be paid in it, which guarantees a certain level of demand for it.</p>","appDepth":2,"appParentPermlink":"f3pu2amb5","appParentAuthor":"runicar","musingAppId":"aU2p3C3a8N","musingAppVersion":"1.1","musingPostType":"answer"}" |
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