GM. (Kinda actually good night, but maybe good morning to some of you 🌞)
I've been trying to get my head around "what is money" but in a way that is relatable and about an hour into re-watching The Big Short, I had a brain wave. 🧠⚡
I boiled the key things to understand down to 3 main things:
1. Reserves: not your cash deposits, not gold, a sort of private money between your central bank and the commercial banks it serves.
2. Securitization: the idea of taking a loan and turning it into a saleable financial product and creating "derivatives" so that it can turn into capital for banks.
3. Capital controls: banks don't rely on reserves to limit their loans anymore, but that doesn't make them infinite loan machines. They have capital controls and yet this plus securitization supercharges inflation.
I am planning to write this up into an ebook or something. I'd love suggestions on who to reach out to for fact checking and general advice as it is the first time I've ever done something like this.
Here is my "foreword" that introduces the problem: 👇
