Matthew Yglesias

@mattyglesias ↗

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Last Checked March 17, 2023

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Tue Mar 14 01:57:43 +0000 2023

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Matthew Yglesias @mattyglesias

What’s really great about this system is the bank doesn’t actually have to lend out physical bars of gold (heavy, inconvenient) when they make loans to people — they can just write little notes that are like “this is $10 worth of gold” and people can swap those notes. — PolitiTweet.org

Posted March 14, 2023

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Matthew Yglesias @mattyglesias

In that system, the bank pays *you* for the right to store your gold because it would then earn a profit by loaning it to other people. Of course legally they wouldn’t be storing your gold bars at all, they’d be borrowing them. But with a promise to give them back on demand. — PolitiTweet.org

Posted March 14, 2023

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Matthew Yglesias @mattyglesias

There are all these big risks hidden in the system because actually if too many people ask for their gold back at once the bank collapses. But most days it’s great — everyone is swapping pieces of paper and all the gold is safe without anyone paying gold storage fees. — PolitiTweet.org

Posted March 14, 2023