What the private sector can create however is the M2s, the M3s etc. Meaning they are able to take government printed money, and leverage them into other forms of money, equity, checks, promissory notes,business loans etc.
Friday, December 17, 2010
Government money vs Private sector money
All money is government money. Every single dollar in every wallet and bank account across the country is government money. Clearly emboldened with the statement, Federal Reserve Note. The private sector can never create M0 wealth, only the government can.
What the private sector can create however is the M2s, the M3s etc. Meaning they are able to take government printed money, and leverage them into other forms of money, equity, checks, promissory notes,business loans etc.
The us gdp is 14 trillion dollars. Only around 1 trillion of that is in the form of physical and digital currency. The rest of the 13 trillion is just fractional reserve lending and other financial devices. Which is pretty consistent with the 1 to 10 ratio demanded in banking circles.
What the private sector can create however is the M2s, the M3s etc. Meaning they are able to take government printed money, and leverage them into other forms of money, equity, checks, promissory notes,business loans etc.
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