I just want to share to people about the history of money and the distribution of power in the world today.
A long time ago, banks were actually vaults that their job was only to keep gold securely. The method used was that the customers who deposit gold will get a receipt, that implies his assets in the bank. After a few years, the receipt become a new form of transaction. People saw that by exchanging receipts is much easier than withdraw gold from the bank, trade and deposit leftovers.
Therefore, the bank saw an opportunity out of this. They came up with the idea called the reserve ratio. Reserve ratio is the ratio of people withdrawing gold from the total amount of gold per annum. Example, in the year 18XX, about 100 kg of gold is withdrawn from a total of 1000kg gold in their vault. The reserve ration is 10%.
They started to print out more receipts, with the reserve ratio provided. If they have a reserve ratio of 10%, 90% more of receipts are printed out to be loaned as people do not even claim the invisible 90% gold. Banks started to increase their loans, and consumer pay with interests. In the end of the day, the banks get money from interest and they do not cost anything as the excessive receipts can be dumped or loaned back when returned.
The receipts that they print is in the form of token money (they called it that and i dunno why). These token money can also be deposited in banks for the people's safety. Again, not much people withdraw their money. The banks then decided to make a reserve ratio of the unbacked gold token money. This increases the money supply in the market and thus creates more loans and profit for banks. People spend more, and banks gain more.
However, during this time, there were a lot of banks and they compete with each other. There are banks that collected other banks token money and demanded for gold in a single working day. This causes the bank to collapse as the gold is not actually there. After a few bank wars, government intervenes in the market to stabilize the situation. They made all banks use the same type of money,so that there is only one type of money in the market. This money is called state money.
The federal government then saw a way to increase profits for banks, and saving their business in case anything happens. They made it compulsory for banks to deposit some amount of money to the federal treasury, as a reserve. Then they gave license to make a reserve ratio out of the federal reserve, so that banks can print more money. This is called the double pyramid mechanism.
After a few while, international trade become more popular. The difference in currency between countries made countries realize they need a strong currency to hold on. Currently, it is the US dollar. All the currency then rely on US dollar as a state money and made a reserve ratio out of it, according to countries. Government then did the double pyramid system again nationwide so that they have abundant money supply.
Now you know how many times our money is unbacked? In current banks, they don't even possess any gold. They made the banks very exclusive and luxurious so that people will have confidence and don't withdraw money from them. The more the money supply in the bank, the bigger the volume of money accordance to the reserve ratio.
If the world uses Gold Dinar as a form of money, it will always be backed up as the gold is in our hands.
This what happens if we lose humanity, and only care about profit.
