Money is basically a promise underwritten by banks, where everyone agrees that it has a value and we all go along with it. Ones and zeros in cyberspace, conjured up and manipulated by banking wizards. Money, it seems, is a fictional popularity contest.
Banks vouch for your financial standing, offer convenience in trading with customers and suppliers and stop you from getting robbed of paper money hidden in your floorboards.
Through over-lending and over-extension of ‘money’ in their coffers, banks tend to get a little too clever at everyone else’s expense. When issuing you a loan, they’re not at risk. They stand as gatekeepers to money, but will take your assets if you don’t pay. Imagine a casino with massive amounts of punters pouring in money, then the casino betting the money themselves. Either way, the house always wins. Access to your money gets monopolised, with the average Joe and Josephine paying to keep these institutions profitable. (Please don’t freeze my accounts, I’m just thinking out loud.)
The majority of money in the modern economy is created by commercial banks making loans. They’re said to loan out more money than they have in reserve at a 10:1 ratio – great odds. In many ways, banks can be seen as pyramid schemes that create debt, set to explode over time as bubbles develop and burst. This is followed by bailouts and no repercussion for crashing the world economy.
Which is why the enigmatic Satoshi Nakamoto (possibly an Australian programmer) unleashed his invented cryptocurrency called Bitcoin a month after the Lehman Brothers collapse in 2008.