Money Is Debt

Money Is Debt

How most money, such as currency, bank deposits, money market mutual funds, and repurchase agreements, is really short-term debt, often backed by other debt. As a result, money is subject to runs when investors lose confidence and don't want to own it. That can lead to financial crises.

Topics covered in this episode include:

  • How counterfeiting currency works.
  • Why most money is debt backed by debt.
  • How a loss of confidence in money leads to bank runs and other financial crises.
  • How demand for U.S. Treasuries as collateral is keeping interest rates low even though the U.S. federal budget deficit is growing.
  • Why the Federal Reserve is considering capping interest rate yields on U.S. Treasuries and what are the risks of doing so.
  • What can individuals do to protect themselves against financial crisis caused by runs on banks and financial securities.


Thanks to Vistaprint for sponsoring the episode. Use promo code: "david" to get free shipping. Also thank you to The Bouqs Company for sponsoring the show. Use promo code: "david" to get 25% off.

For show notes and more information on this episode click here.


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