There are so many bloggers on the net (and politicians, newspapers, the
man-in-the-street, etc) who castigate the banks as being the source of all
our problems. For example, one blogger this morning writes: "The banking
system is the biggest scam ever invented." But banks have only been doing
what many governments in the past have been doing (even China a thousand
years ago) -- printing paper documents (derivatives in modern times) which
they then treat as money. Money is only real money when it has real value
-- when it counts as a surrogate to be exchanged for real goods. Banknotes
(and credit and debit cards) can be convenient substitutes but only when
they hark back directly to substances of real value. When Western
governments started printing banknotes in 1914 in order to pay for WW1 far
beyond what was borrowable from their public, they found it such an easy
method that they have continued to do so ever since. When the present
world-wide currency madness finally collapses in total confusion perhaps
that small (but growing) body of economists (the so-called "Austrian
school") will be finally given some visibility.
Keith
P.S. From now onwards my postings will be going onto a new blogsite,
Allisstatus (see URL below) in the hope of provoking wider discussion.
Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2010/12/>http://allisstatus.wordpress.com/2010/12/
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