[Tanoc]

Which is the way it's supposed to work. You keep enough for daily transactions, because the expectation of multiple large scale withdrawals happening either in short succession or simultaneously is the most unlikely scenario to happen during operation. A bank keeps records of every account's value, but at any given time only has enough cash to cover one fifth of all of the money it has on record to be in those accounts. In other words, the bank's physically only got 20% of the money it has on the books. It has to work this way because there's no way a bank could hold all of the money it's customers are said to have, either because of physical space constraints or because there's literally not enough money in existence to cut it out of circulation without creating ridiculous deflation. The change away from the gold standard changed this quite a bit, and so has digital banking, but the numbers in your account are still backed by something that tangibly exists.

[pdonis]

> the numbers in your account are still backed by something that tangibly exists

Only if you consider fiat money that can be printed in arbitrary amounts by Mr. Bernanke's famous printing press to be "something that tangibly exists".

[Tanoc]

Well there's also assets. The bank can hold the value of land deeds or house loans for example. The house and the land it's on are tangible things that can be evaluated. Though I suppose that's a degree removed from printed bills or minted coinage.

[pdonis]

> I suppose that's a degree removed from printed bills or minted coinage

Yes, because the "value" of those assets is just a guess until you try to sell them. It might be a highly educated guess, but it's still a guess. And the time the bank would need to sell them--because it needs more cash due to an unusually high demand for cash withdrawals--is precisely the time that your educated guesses all go out the window: you're selling not because you're making a trade to improve your rate of return, but because you need cash, now, and buyers will know that and will gouge you on the price.

[SR2Z]

Despite that, USD seems to hold its value pretty well. Certainly a lot better than many other "stores of value."

[pdonis]

> USD seems to hold its value pretty well.

The Consumer Price Index has inflated by a factor of more than 15 from January 1947 through March 2026 [1]. That's an annual rate of inflation of about 3.45 percent. That's an indication of how the USD does not hold its value--if you have a stock of dollars that you want to hold the same buying power year to year, you have to add 3.45 percent to it every year just to stay even.

[1] https://fred.stlouisfed.org/series/CPIAUCSL

[SR2Z]

Ok, great. Now list something what that's actually held its value.

A nice, mostly-even 3% a year is spectacular. Gold can't do that. Bitcoin can't do that. Only a central bank can do that.

[pdonis]

> Now list something what that's actually held its value.

Gee, I dunno, anything whose value as measured in dollars increases by more than 3.45% a year? Like, just off the top of my head, stocks, bonds, real estate, and yes, gold. Bitcoin, maybe.

> A nice, mostly-even 3% a year is spectacular.

I don't think you understand that that 3.45% a year is not a rate of appreciation, as if dollars were an asset. It's a cost that you have to bear every year if you insist on holding dollars instead of something that, um, holds its value. In other words, it's a rate of loss of value of dollars.

> Only a central bank can do that.

If you mean that only a central bank, as an agent of a government, can force people to use money that loses value every year as the central bank prints more, yes, that's quite true. But it doesn't mean what you appear to think it means.