How can you create “real money”?
Sorry if the title isn't properly formulated. Due to the recent abuse of the current monetary policy from the governments, and especially from the US, this question came up to my head.
When I refer to "real money" I mean money, the asset, that can be redeemed by itself, without any trust. For example, gold is real money. Cash is real money; even if there's a trust from the government since they're printing it, there's no trust when I hand out a dollar bill. Bitcoin is real money et cetera.
With this definition credit isn't real money. You can create credit out of thin air. Credit requires trust to work; the existence of the previous assets.
My question is: When a government wants to create money, does it have to print it? Since they are the only mint, what prevents them from pretending they have enough reserves (in cash) and increase their credit balance with zero risk?
4 comments
[ 3.5 ms ] story [ 16.8 ms ] threadThere is no abuse. Central banks are working as expected, and the economy is responding as expected.
> When I refer to "real money" I mean money, the asset, that can be redeemed by itself, without any trust. For example, gold is real money.
No, gold is not real money. At best, gold is a financial asset.
https://www.investopedia.com/articles/basics/08/invest-in-go...
> With this definition credit isn't real money. You can create credit out of thin air. Credit requires trust to work; the existence of the previous assets.
Also wrong. Money is just a convenient way to express and exchange debt, which enables simple and fair economic trades. Hence the basic properties of money including being a unit of account and a store of value.