![]() I use also the example of a gym to convey this idea. Basically, you have a reserve of energy, a pool of available resources, and then promises that you push out against that. Many institutions do this, and this is a fractional reserve system. Most people issue far more promises against themselves than they actually have the ability to redeem immediately. So, if everybody that I've given a promise to simultaneously came back to me and said, “Hey, Brett, let's go do that thing right now,” I wouldn't have the reserves of energy to be able to simultaneously deal with that. I'll often be issuing out far more of these promises upon my energy than I actually have the ability to simultaneously deal with. ![]() I say, “Hey, I'll see you at some point,” or, “Hey, let's go grab a drink at some time,” or, “Let's do a collaboration.” Every time I'm doing that, I'm issuing out a promise, about a future action that I'm going to be taking. Substack piece, I was writing about fractional reserve emotion-I said that I, in my daily life, am constantly issuing promises upon myself to people. I have various metaphors by which to convey this idea. The key to actually understanding the banking sector and concepts like fractional reserve banking or credit creation of money, is you have to conceptualize that there's actually more than one form of money. The bank takes that money and gives it to somebody else.” In that statement, you're imagining there's a single form of money going into one institution and then out again. They'll say things like, “I put my money in a bank. This is one form of money fallacy, and is one of the biggest conceptual errors people make when they're trying to understand how the monetary system works. One of the main problems people have, across the political spectrum, when they're thinking about this concept of fractional reserve banking, is that they imagine that there's one type of money in society. It's more accurate nowadays to call it credit creation of money. ![]() ![]() This transcript has been edited for clarity.īrett Scott: This term, “fractional reserve banking” is controversial. Please view them as open invitations to dive deeper into each resource and topic explored. The episode-inspired artwork is by Carolina Altavilla.) (The musical offering featured in this episode is The Witness by Rowan Rain. “An emotional guide to fractional reserve banking,” an article by Brett Scottĭoughnut Economics, a book by Kate Raworth Episode references:Ĭloudmoney: Cash, Cards, Crypto, and the War for Our Wallets, a book by Brett Scott Subscribe and listen to Green Dreamer in any podcast app, or read on for the episode transcript. ![]() He publishes the Altered States of Monetary Consciousness newsletter and tweets as of the topics we explore in this conversation include how the banking sector functions to extract and centralize financial wealth, the questionable presumptions behind "financial inclusion," how the cash system, ironically, serves as a constraint to the acceleration of corporate capitalism, and more. He is the author of Cloudmoney: Cash, Cards, Crypto and the War for our Wallets (2022), and The Heretic's Guide to Global Finance (2013). In this episode, we welcome Brett Scott, a journalist, campaigner, monetary anthropologist and former financial broker. ![]()
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