[pjc50]

I'm not really clear on how this is supposed to interact with the real payment system: is it a credit card, with a normal acquiring bank? Is there an extension of credit?

Because all credit is also money creation! (Broad money). Anyone with a pen can create money by writing an IOU. This is one of the things the goldbugs don't seem to understand properly.

Also, if this is some form of geek "hawala banking", how does it avoid running into the need for money transmitter licenses that has plagued attempts to legitimse bitcoin?

[jonahbenton]

Yeah...my limited read of it is, first off- from a biz perspective, it's a toy. It has a toy understanding of money, a toy understanding of inflation, a toy understanding of payment...but the mechanism they have stumbled upon has underlain real-life credit systems for thousands of years. Lots of successful things have started out as toy implementations from toy understandings that get usage and users and become real. The Pinocchio story, rather than the Cinderella story.

My understanding is it would have the trust aspects of Hawala banking, but for goods transmission, not actual money as occurs in Hawala. I don't think there is a money transmission problem.

I am sure were this to be real that there would be a tax problem. There would need to be reporting of sales and so forth, in fiat equivalent.

I don't know that there needs per se to be connectivity to real payment systems, though there do need to be real identities.

Anyway, just guesses. Glad to see it.

[jaekash]

> Because all credit is also money creation! (Broad money). Anyone with a pen can create money by writing an IOU. This is one of the things the goldbugs don't seem to understand properly.

I cannot do fractional reserve banking. And if I can't do that then I can't really create money. A bank can have a fraction of the real hard currency that others can spend in "reserve" (physical or electronic). I cannot do that, I cannot borrow you $50 and some other guy $50 if I only had $50.

So I dunno, depends on what you mean by money creation, but writing an IOU is different from what money creation is in the sense that most people mean. It is closer to issuing a bond, which is not really money creation.

[fragmede]

If I have $50 and I use my credit card, and send $50 each to my very trusted friends A, B, and C via, say, Venmo, is that not fractional reserve banking, built on top of my credit with my bank? I've not independently created any money since this only works because of my bank's credit to me, but I've still created $100, no?

[jaekash]

Well yes, your bank did create the credit, at your request, and the money they created went to you which you gave to others. So you were instrumental in the process, but without the bank that can do fractional reserve banking none of this would be possible.