Understanding Money& Banking Pt. 5: Inflation, Gold Standard

[tothemax01]

Hence, because all banks are held in check by the threat of being unable to meet liabilities due to other banks (created when customers from different banks write checks/transfer funds to each other), outstanding credit (and thus reserve ratios) remain relatively stable - it does not simply balloon. Combined with a stable money supply (gold), this means no inflation, and normally mild deflation due to increasing transaction volumes caused by economic growth.

[tothemax01]

It is a common misconception that the banks can simply create as much 'money' (actually 'credit') as they want. The banks are limited in their expansion of credit by interbank transactions. Whilst people withdraw little of their money at any time, banks constantly demand money from other banks due to customer interbank transactions. If a bank gets out of line by extending too much credit - the other banks blow it up.

[thinkfree41]

You are correct to say that banks should not have the right to create money, but this is only because it is morally wrong for a private institution to control the creation money 'in the name of' the state - effectively using the state's identity and rights for their own profit-seeking purposes.

[krislouis5]

Hi Paul, Great video!

Please answer this question: If there is 100% reserve requirement, won't it hamper speed of growth for the country?

[MrSmackdown100]

@krislouis5 Tes ,The price of growth would increase and it would impede growth since competition for

reserves would exclude those whose projects could not support the interest rates being asked.

For example ,if the bank pays you 7% to use your money it may lend at 12%. to a business. Some businesses would not be able to afford that 12% rate and so their projects would be abandoned.

[CymroGoch]

Isn't gold just as fake as paper money? I know it's relatively rare and a useful substance, but what relevance does that have in and of itself? How is gold anymore 'real' than paper money to a fisherman who goes into a shop to buy a fishing rod, whose owner then uses the cash to purchase services for home improvement. None of these people specifically need gold for any of this.

[coreyclamp]

@CymroGoch

The short answer is no - paper money can be created from little more than a printing press, paper, and ink. When this happens it devalues every other piece of paper money already in existence; this is inflation. Gold cannot be created by man, even from other materials (at least until alchemy is a reality).

For a more in-depth explanation read 'Gold and Economic Freedom' by Alan Greenspan

[charronfamilyconnect]

Why do we even need to go so far as tieing money to a scarcity such as gold? What if we changed money into a representation of labour and time. For ex. We have projects in the community to build better bridges,roads, trains, etc.. We decide what needs to be done and agree on a price and we issue money to the people that produce these goods representing their time/labour resulting in abundance and inflation is not an issue. Abundance is wealth not scarcity!

[FortNikitaBullion]

This is the same reason gold and silver are so cheap today. There is so much "gold credit" out there, debts denominated in gold, a.k.a. gold ETF's and other forms of paper gold.

[Kikarok]

I just had one thought about something you said early in the video about the gold standard: perhaps there is a way to issue paper notes and still keep a (somewhat) static gold standard. Rather than print something akin to, "TEN DOLLARS IN GOLD COIN" on the note, print instead something akin to, "TEN GRAMS OF GOLD." Then the criminal lawmaker would have to change the scientific definition of the universal unit of mass in order to write into law that your note can't claim as much gold as before.

[grpattendotcom]

thanks.

[vishalquake3]

Thank you so much for this series of videos !! I really needed to understand about all this ^_^

[coreyclamp]

@charronfamilyconnect

If gold is unobtainable, then it would lose it's value as a medium of exchange. If the scenario you describe were to happen, our society would inevitably switch to another medium of exchange. This could be anything - whatever it is, it needs to be somewhat rare. Imagine using 2 tons of lead to pay for a $1000 TV @ $0.25 per lb. The same TV could be purchased for less than an ounce of gold @ ~1450 per oz. If you want a more detailed explanation please reply.

[charronfamilyconnect]

Money should be a token or receipt representing good and services rendered not borrowed gold. My favourite quote from Abe Lincoln: "the wages of men is far more important than the wages of money". Wish people would wake up to the truth and realize that we shouldn't serve money but rather it should serve us. This artificial creation of Scarcity due to our greed and ignorance through the control of the money supply will eventually lead to our downfall as a species. Austrian Economics is flawed!!!

[richardcadbury]

(2/)It's my choice to decide what banks to deposit with, borrow from, and my choice to decide whether to accept cardhouse money. I am also at the mercy of people who may decide whether to accept my gold vs 100%Res note vs 2:1 FracRes note vs 20:1 FracRes note.

Cardhouses are NOT theft, as you claim. They are a contract, freely entered.

[richardcadbury]

And here's the second reason why it isn't unjust to build a cardhouse(1/2)

You say making FracRes notes "increases the money supply", as if all dollars are created equal. .

All dollars are NOT created equal. Printing a FracRes note doesn't increase the supply of 100%Res notes.

A 100% is less risky than a FracRes note. I (a shop owner) am offered a FracRes note for a pint of milk. Will I accept it? Or insist on a 100%Res note? Or maybe charge $2 FracRes notes vs 1$ 100%Res notes per bottle?

[richardcadbury]

Paul, 100% reserve requirements just ain't just. You have the right to build a cardhouse as high as you like, and bear the responsibility for it.

You should be punished after it collapses, IF it ever does.

I don't have the right to punish anyone just because he's building a cardhouse and cardhouses occasionally (or even often) collapse.

One may punish people for what they've actually done, not what you reckon might happen at some point.

[111Socrates777]

Marxism, price fixing and the removal of the interest mechanism - this is the solution

[Mirithonomy]

Sorry friend. If you try to isolate your economy, it will fall to ruin as the rest of the worlds strides past you.

[tomozope]

Paul,

You should read the new book Modern Money Secrets written by Byron Dale. He really expands on this whole subject.

P.S. The Wiemar republic operated a debt money system and they had their 'hyper-inflation' when the private banking system raised the interest rates to 900%.

[charronfamilyconnect]

Please excuse my typos and spelling errors everyone. I am not uneducated. I am just busy trying to make a living like Paul here is. I respect all peoples opinions. Afterall this is a democracy and we are fortunate enough in Canada to have access to all information and education. Thanks again!

[Mirithonomy]

Not a democracy, a republic. Democracy is the worst form of dictatorship. I dare you to try to overthrow the masses.

[charronfamilyconnect]

Why are you blocking my comments Paul. Please allow your viewers to be educated by allowing them to see this comment. They as as well yourself need to educate yourself further. The video everone should go and see if they want a fully informed opinion on gold standard applicability is called: Can we go to the Gold Standard? - Interview with Byron Dale part 1 . Its a 3 part serious and is the most intelligent and honest explanation on the gold standard proposed system.

[bergweg]

Money should be spent into the economy not loaned to it, this is why we are in an perpetual exponential debt to private banks (including central banks, they are also private).

[bjorinn]

Now it makes more sense! Thanks for these videos.

[vorbeigehende]

Zimbabwe pensioners struggle with inflation 15 Apr 2008

watch?v=I20UNlC6qWY

[Rickdeckard2020]

Great Video! at last someone places the Gold standard back in perspective.

Imo theres another major problem with GS though in the sense that a society still has to pay someone for the currency to simply exist in the fist place, not good, to me its like a community having to pay to use the airwaves or having to borrow airwave-rights from from an airwave-right baron.

[mnemeth1]

I think the thing you're forgeting with a100% reserve non-fiat system is that when you apply interest to loans, the application of that interest inherently creates a shortages in the money supply.

If the interest is never monitized when the loan is generated, there will never be enough money in circulation to repay all the outstanding debt. - just as we have now.

[giorgioxyzb]

Can you explain why there would be a shortage in

the money supply?

Banks could lend that surplus money further. Or they could spend it (invest it) to improve their services: buy buildings, etc.

In this way, money would be injected back into circulation.

[rjbabao1987]

@giorgioxyzb Interest is a value above the currency. With limited supply of currency and credit, application of interest wouldn't be sustainable.

[webovisionca]

It seems that it would be difficult to implement the bank lending rule without effecting the economy. Their businesses are based on the current model and the new laws would have to be implemented over a period of time to allow them to adjust their business models. Many banks would go out of business. I am interested in hearing your ideas of how to implement these changes. Thanks for the informative video!

[adrianaJacobs]

More likely the Chinese government is tired of owning US dollars that consistently lose their value, so they are putting a portion of their trade surplus into gold! This is increasing the world-wide demand for gold and putting pressure on the price of gold. They have also allowed their citizens to begin owning gold (as the US did in the 1970s) so increased demand is coming from that sector.

[guitarbop]

Gold Standard refers ONLY to a system whereby the value of a currency (i.e. the $) is fixed as a representation of a given amount or weight of gold, does not vary, and is exchangeable for it's denomination in gold coin or bullion from the treasury. The amount of paper currency in circulation is then limited to the actual available gold in the treasury. Gold coin would have ONLY a $ amount and would not be valued by it's weight, except when exchanged with foreign currency. STOP THE BULLSHIT!

[manishchoffla]

great video Paul.Thanks :)

[Civsuccess2]

In the ancient time, Gold is not a common used currency. Silver and Copper are more common.

Gold Standard collapsed by itself. Please see "FDR Ends Gold Standard in 1933" on youtube.

[PaulMcKeever]

FDR made the ownership of gold illegal. It did not "collapse by itself". The government stole it.

[Civsuccess2]

What about population increase? What about international community all fight for the same gold reserve? What about people choose to hold the gold in home?

All those examples will cause shortage of money, and therefore cause deflation.

[PaulMcKeever]

A population increase, per se, has no effect on the value of the dollar. If an increase in the population involves an increase in productivity, the buying power of the dollar gradually increases (i.e., prices decrease) proportionately to the increased productivity.

There is s separate issue: the feasibility of using actual gold as money. Frankly, I do not think it feasible so long as there are barriers to immigration/emmigration, and to free trade. In the interim (cont'd)

[PaulMcKeever]

...(cont'd) prevent any change in the number of dollars making up the money supply.

[Civsuccess2]

Population increase will result in an increased demand of currency. Since the supply of Gold is constant, the price of Gold will increase. There will be a shortage since there's no new supply. Gradually, people will abandon Gold as a currency because it is hard to trade for it.

[PaulMcKeever]

That makes no sense. If the price of gold goes up, it goes up for everybody, which means prices will go down. When prices go down, less gold is needed to purchase the same goods and services.

If the issue were to be that the amount of gold needed to buy something is so small that it cannot be physically handled, one would simply issue paper claim cheques representing a tiny weight of gold stored away elsewhere.

[nicecutoffs]

This was a great video - I kind of waned during the stuff on counterfeiting, but I see it was a very nice set up for this one. All this time I had thought that the main thing that banks were (morally) guilty of was charging more interest on loans than they pay on deposits. But If I follow your argument, the real problem is that they have the privilige of creating money in a manner similar to counterfeiters, except where counterfeiters make currency, banks make credit?...

[nicecutoffs]

In doing so the banks simultaneously decrease the value of the existing money supply (through inflation that is covered up by economic growth) and make massive profits off of interest on loans whose total principle only exists through (legal) fraud? Am I getting this right? Wow. So now what? Vote Green?

Thanks Mr. McKeever, you are a good samaritan for explaining all this to us! Carry on good sir, carry on.

[PaulMcKeever]

You appear to understand what I'm saying, yes. But, no, I would not recommend you vote green.

[billhicks23]

Hey Paul,

you did a great job so far I absolutely salute you. I have never had this issue explained to me in such an understandable fassion before. Thank you so much.

But I have one question though - With a gold-standard 100% money: Wouldn't it be possible to kind of corner the money supply by systematically lending out your money at interest and re-lending the interest as well.

In the long run ONE guy (the one who does this lending-re-lending systematically) would own ALL the money in the end.

[PaulMcKeever]

Don't forget that bankers eat, sleep, golf, hire, type, etc. in the same economy that you do. They cannot exist without SPENDING some of the interest they earn on the things that make banking possible: staff salaries, paper, computers, rent, heating bills etc. Any of those suppliers could, just like the banker, save their money and lend it out...which is exactly what they do when they deposit it witha bank in a 100% reserve system.

[billhicks23]

Well all that aside it still IS possible for ANYONE to systematically save money and collect interest on it and then save those interest payments as well (imagine that your daily costs would be covered by a normal job).

In the long run you (or all the people doing that) would end up with all the money. Imagine that Joseph put down 1 Cent for Jesus at his birth at say 3% interest.

Today Jesus would own 0.01 * 1.03^2008 $ = 598*10^21 $

That is trillions times more money than is in existence today.

[He101A]

There will be a run on the banks in the near future.

[miamisurf]

I agree very near future. That will lead to a type of controlled money supply and end to counterfeiting by means of radio frequency identification chips. Laugh now but it will happen.

[mrboogieman]

Great video Paul, but I noticed one major mistake. The ideal reserve requirement for the situation you mentioned at 10:00 onwards is 50%, *NOT* 100%. A 100% or full reserve lending means a bank cannot lend out a depositor's cash whatsoever, whereas a 50% reserve requirement means the bank can lend out the depositor's money exactly once. This is what Lincoln did when he was president before he was shot.

[PaulMcKeever]

No, a 50% reserve would allow the banking system to lend out two dollars of credit for every dollar of currency. With a 100% reserve requirement, the depositor does not hold bank credit: the depositor's deposit is a "time deposit". WIth a time deposit, the depositor, for a period of time (e.g., 6 months or one year) has no right to the immediate return to him of the currency he has loaned to (i.e., deposited with) the bank.

[steelingmonroe]

So Paul, are you saying that effectively by 'making' money out of thin air in the form of a loan, the banks are doing exactly what your covert counterfeiter was doing in your previous video? Reducing our spending power without us realising???

[PaulMcKeever]

Yes.

[PaulMcKeever]

Someone here pointed out that Ron Paul is a representative, not a senator. In trying to reply, I hit the damned "Remove" button: sorry. That said: yes, I know (see the Info about this video).

[WickedWilmes]

Hi Paul, I'm not a genius in these matters but they do interest me a lot. How does this relate to what they call the present credit-crisis in the US? Is that private banks giving out credit without reserves. Also it is my understanding that US government incentivized banks on giving more credit? Cheers, Ralf.

[alciadanet]

- Your point on the sentence "Ten dollars in gold coin" isn't really a good argument. The sentence on the bank note could read "Represents 1 ounce of gold" instead and government couldn't change the law.

- The credit issue is partly due to government bailout of banks

I think the best thing is to not make one currency a legal tender but to let private banks issue their own money. With competing currencies there is no need to control inflation.

[horvay]

Its actually not "controlling money" but rather protecting individual rights.

Once a bank gives out more credit than they have in reserves, they are counterfeiting, and stealing from everyone else.

Its an issue of morals.

[politEgoEgonomics]

There's no conflict here MrPaul, its just that you are used to looking at and applying issues to "the way it is"

and I'm exclusively "might be and ought to be"

Cheers! and thanks for the 'in'.

PolEgo$

[PaulMcKeever]

Oh! The Youtube Objectivists Group "in"? No problem.

Cheers,

PM

[PaulMcKeever]

Lending, per se, is not a problem. The problem with lending out the same dollar simultaneously to numerous people is not just an issue for the borrower, the bank, and the bank's investors.

See parts 3 and 4. When the bank issues credit that is not backed by currency (whether gold or paper), it increases the total number of dollars (which devalues all dollars), and transfers some of the value of pre-existing dollars to its borrower without the consent of dollar owners.

[horvay]

Increasing the money supply is not bad in itself. When production goes up (more products), the worth of gold would also go up, and miners would be more inclined to mine more.

So production increases the gold supply, otherwise one would get deflation. Borrowing money, if it goes into production, I don't think would inflate the money supply, if the production goes well and the borrower can pay it back.

(cont)

[horvay]

Though when I think about it some more, I'm reminded that some things, like mortgages, are not production.

So scratch what I said anyways :P.

I'll just have to think about it more.

[horvay]

Okay,

I understand now. When a bank takes in 50k and gives out 100k, half of that is not based on actual wealth. Its baseless indeed. It was not gotten by production; therefor, reduces the worth of everyone else's money that is based on wealth gotten from production. Its counterfeit.

But heres the thing I don't understand. Why has inflation only been around 4% for the last few years? With banks only keeping 10% reserves, and the Fed's actions, it seems like it should then be higher.

[horvay]

Ah, because it has spouts in the stock market which isn't really recorded by normal inflation graphs. Also it was constantly feeding into the housing market ever sense the great depression which we are feeling now.

In other words, its feeding itself into specific areas?

I keep answering my own questions I think.

[PaulMcKeever]

Keep in mind that when you see the word "inflation" nowadays, it means an increase in average prices. In earlier years of the 20th century, inflation meant an increase in the number of dollars. The latter tends to cause the former.

Prices may have increased 2-4% each year, but those increases were during periods of economic growth. With an unchanging number of dollars, that growth would have improved the value of the dollar, hence decreased prices.

[horvay]

Do you think deflation is immoral as well? I know innovations objectively lower real cost, but just having more products because of more people does not.

I think in a free market with a gold standard, miners would mine more if each gold was worth more, effectively keeping prices constant when production rises (not innovation though).

[PaulMcKeever]

I do not see a moral problem with a deflation or inflation of prices in a system with a fixed supply of dollars. With a fixed money supply, increases of productivity lead to lower prices for perfectly moral reasons, and decreases of productivity lead to higher prices for perfectly moral reasons.

Inflation of the dollar supply is different: increasing the number of dollars redistributes the value of dollars, but decreasing the number of dollars does not. The first is immoral, the second is not

[horvay]

Increases in population and production (not innovation or productivity) would also deflate the money supply. I agree lower prices from innovation is good.

But prices rises from counterfeit punishes saving, and lowering prices (not innovation) punishes spending.

I suppose deflation is be bad but not immoral. Prices really shouldn't fall just because there are more people producing. But thats why I said, in a gold standard, miners could also mine more if each ounce becomes worth more.

[horvay]

I see your point now. Good video!

[charronfamilyconnect]

Hi Paul,

I agree with you that this fraudulent Fractional reserve banking system is ripping of everyone's wealth as far as purchasing power goes, all else being equal. The only concern I have is that in a 100% reserve requirement, the price of rent(interest) on this money will be rather high as not everyone is fortunate enough to have enough money.He who owns the gold will still be making the rules in this gold backed 100% reserve requirement system. Guess this will lead to survival of fittest

[PaulMcKeever]

Everyone who EARNED money would have it, just as everyone who, in the wild, collected water and food would have what they need to survive. Those who sit on the beach and tan, expecting food and water to come to them, rightly die.

[swu880]

@charronfamilyconnect

ah- but a 100% reserve requirement is the ONLY true system of credit. Any other system is fraudulent, harmful & detrimental- not real credit. ie- if i loan u a hammer, i must have a hammer to loan u. Fractional fraudulent bankin says- i loan u an IOU for a hammer which i dont even have & u have to give me back a hammer + interest. See the obvious fraud?

100% backing is TRUE money- it prevents corruption, inflation & deflation

[charronfamilyconnect]

@swu880 I agree with you that lending pretend money and expecting real money(sweat equity plus interest) is fraudulent in the highest degree. Honestly, I am not an advocate of lending anything and charging interest. Afterall, where does this interest come from? Gold doesn't produce little baby gold nuggets of its own as it doesnt have regenerative abilities

[charronfamilyconnect]

@swu880 if you get m point. We should come up with a system of credits representing our labour(goods/services) which can be used to acquire more services.

[charronfamilyconnect]

Hey Paul,

I have another question regarding your 100% gold reserve proposal even though you still refuse to answer my 1st question; how would the average person who doesn't own gold fair in this system? What is to prevent those who own the gold to raise their interest rates to very high levels? I see this inevitable action leading to a syphoning off of money in the economy and economic stagnation, and finally most of the gold will become concentrated in fewer hands. Welcome to true Capitalism!

[PaulMcKeever]

I did not refuse to answer your question, cfc. It is simply the case that I have a business to run, and I offer up these videos largely for free. You are already getting more than you pay for.

Again: money would end up in the hands of those who earn it. Period. Any system in which the money supply is allowed to increase is a system in which wealth is stolen by the person who increases the money supply. (cont'd).

[PaulMcKeever]

The current system allows private banks and central banks to steal wealth from those who earn it. The social credit system - which, given your tone and comments, is probably the one you support - allows governments to steal wealth from those who earn it. Socialists love that idea because: they can then sit on the beach and wait for government to serve up stolen food and water for them.

[charronfamilyconnect]

Thanks for getting back to me Paul. I appreciate it as much as I appreciate your videos. Sorry for sounding rude, I guess the expectations are a little too high in this day and age of technolocy. Sorry I set the response time expectations too high. I can appreciate that you work full time and I likewise. Yes, Ido think some form of social credit system would be wiser, but not the kind you implied.Have you ever heard of the L.E.T.S or Ithaca Hours systems? Those are the kind of systems i support.

[charronfamilyconnect]

Hey Paul,

Scratch that comment about social credit out. I think I misused the term. I don't believe in a welfare state. Those systems I told you about are more of a community support system, but it in no way rewards lazy people. It rewards those who earn their money. I would be interested in your commentary on those systems. You may find that they are a better solution than this Gold standard proposal that I feel will lead to hoarding and instability.Only my opinion. I respect yours as well.

[PaulMcKeever]

Actually, it is some of the Austrians who are most in favour of a 100% reserve. For the reasons explained in this video (and in parts 3 and 4) it is false that there would be no inflation if the fed tied its currency to gold, or if it replaced all paper with gold coin. Inflation is an increase in the money supply, and credit - created by banks - is money.

[PaulMcKeever]

I apologize UnhealthySalad. I accidentally hit "Remove" instead of "Reply" when trying to reply to your third post, which effectively asked: if the government doesn't like inflation, why doesn't it impose both a gold standard and a 100% reserve requirement. Answer: they aren't against monetary inflation and the wealth redistribution it causes. They're in favour of keeping prices constant, erring always on the side of modest price inflation.

[politEgoEgonomics]

The route to understanding this issue is in The consistent recognition of Objective Value.

then;

Is any banking system to be ultimately an institution or a business?

Then investing, lending and borrowing (credit) becomes a Moral issue.

ie)Midas Mulligan cf. Alan Greenspan

This is why I think Ayn Rand initially supported Alan Greenspan as FedChairman as a Means to inject a consistent morality into the system(knowledge). To that End he didn't(couldn't?)

Choice is: Moral education or hard lesson?

[PaulMcKeever]

I don't think your question is correct, but morality is certainly the field upon which the issue of reserves and inflation should be considered and ultimately judged.

The issue isn't about whether it is right or wrong to lend: clearly, there is nothing immoral about Midas Mulligan lending out a claim on some amount of gold (i.e., credit, backed 100% by his gold holdings), and charging interest.

The issue is: inflation and reserves.

[politEgoEgonomics]

You misunderstood what I mean by:

'...Then investing, lending...becomes a Moral issue.'

I didn't, in any way mean that the Morality was in the lending etc. For a banker the morality is in who you lend it to.

ie)Midas' being forced to repay Eugene Lawson for his injustice to him.

or Gates and Buffet pouring their fortunes into the impoverished hovels of the world because they were taught that "its the right thing to do"

The Law of Causality properly defined and applied eliminates 'the issue'.

[PaulMcKeever]

You'll have to explain how "The Law of Causality...eleiminates the issue" before I can evaluate your assertion. Unfortunately, youtube comments effectively prevent meaningful typed debate. Better: if you like, you can expand on your point at my blog entry for this video:

At blog[dot]paulmckeever[dot]com, the title of the blog entry corresponds to the title of the video.

[horvay]

Now when government steps in and says, "I got yo back man!" then obviously this would create a huge house of cards that would lead to inflation. But without that, only the bank and the depositors would lose out--which is a perfectly good reason to think when depositing money! :P

This is why your video confused me though.

[j3rdog]

Paul,

Wouldn't a 100% reserve law be contradictory with the idea of laissez faire capitalism? If not a law, what in the free market would there be for private banks to do only loan out a dollar for every actual dollar they have?

[PaulMcKeever]

Hi j3rdog. This series, so far, has been largely legal and economic, and largely devoid of philosophy. However, what is consistent or inconsistent with capitalism cannot be properly defined without reference to the ethical system that rationally gives rise to it. I hope to do a video, in this series, to discuss that topic so that questions like yours can be answered in a non-arbitrary way. The history, concerning your question, has some people arguing that...(cont'd)

[PaulMcKeever]

...so-called "free banking" is the capitalist form of banking, and others arguing that free banking deprives people of their property just the same as counterfeit.

The question addressed in this video, though, was not so much "what is the capitalist system of banking?" per se, but "what is the system that is not inflationary?". It is certainly the case that free-banking is inflationary.

[PaulMcKeever]

As I see it, there is no way, short of a law, to prevent banks from issuing more than $1 of credit for each dollar of gold/central-bank-notes. A contract between bank X and its customers - in which A agrees to maintain a 100% reserve - would not prevent bank Y from issuing several dollars of bank Y credit for each dollar of bank X's credit deposited at bank Y. Ultimately, bank Y's credit would be backed only by the gold/paper dollar that is on deposit at bank X.

[PaulMcKeever]

NOTE: in my reply above, "in which A" was supposed to read "in which X"

[sirscutter]

OK, so I actually watched the whole video now, and I really like this video. It makes sense and I learned a lot.

[sirscutter]

I think the problem with the standards most governments use today is the fact that governments are in control of it. Governments have no incentive to make customers happy since they are forced into their services, so let the free market handle the money supply, and you'll see customers flocking towards the honest businesses who distribute gold and gold-backed paper effectively. Competition makes everything better.

[AndyMH182]

I like these videos. Have you posted Parts 1-4 yet?

[PaulMcKeever]

Hi Andy:

Yes, if you click on the videos link for my channel, I think Part 4 currently appears on the first page of the list of videos, and parts 1-3 appear on the second page of the list of videos.

[dabruin2]

Another excellent video. Thanks for including the credit component in your discussion. It was a revelation.