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Comment by transverse | Hacker News Reader

Don't you know how the financial system works? Banks make currency. With Bitcoin, they haven't figured out how to do the same. Their empire is in danger. His argument is predicated on the false assertion that currency has to be legally recognized; it doesn't. It only has to be accepted by those who trade with it. Not only is he bashing Bitcoin, but he is bashing all of cryptocurrency. What an idiot he is. The real fraud is perpetrated upon us by banks who lend dollars without holding hold an equal value of gold or silver. In past centuries, this was punishable as a felony by death.

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Why the downvotes? transverse is right. The medium of exchange doesn't have to recognised by the Government, only accepted by both ends.

I would recommend you read one of Paul Krugman's book to understand how banking and the economy work.

Could you elaborate what specifically is wrong with what transverse is claiming?

The part about not backing deposits with silver and gold being fraud is pretty wrong.

Even in Ye Olden Daze, banks would send deposits of things like gold and silver right back out the door as loans.

Well, the very first assertion "Banks make currency" is not accurate in the US (the context of the article). Currency is "made" by a combination of the US Treasury and policy set by the federal reserve. The fed is a bank of sorts, but in no sense is a bank like JPMC creating currency.

https://en.wikipedia.org/wiki/File:Fractional_reserve_lendin... shows how banks effectively expand currency. It's linked in https://en.wikipedia.org/wiki/Money_multiplier

Banks like JP Morgan don't have the power to put more money into circulation, so you're wrong.

I'm not entirely sure if this is a joke or not. One of the fundamental functions of a bank is to increase the money supply by creating debt.

You should review the concept of "fractional reserve banking".

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