#1 -- Well he didn't suggest that everyone do it.

#2 The actual amount available at any given time is not so important as over time whatever amount there is reflects whatever "amounts" of goods, services, value and labour "exist". You have the same the other way around with the paper money supply. Increase it, and "over time" there's just as much "inflation" (not a price increase BUT a money devaluation) to cover that. So how much gold Chad has compared to other countries matters exactly zero.

If you are actually arguing in favor of a fractional reserve system, I fail to see any logical support for that.

A fractional reserve system has two truths, two facts:

1) The debt will always become greater in a country, because the money is debt in the first place.

2) The income disparity will always increase, meaning you will never be able to overcome poverty, sickness, or even war. The very way the fractional reserve system works is by nature transferring wealth from the lower and middle-class to the upper, and from there it goes to a few very wealthy, very elite.

Can we leave the batty economics discussions to other forums? This one is about hacking and startups.

jmtame, perhaps besides taking "Money, Media and Power" classes (http://news.ycombinator.com/item?id=317659) you should consider taking some actual economics courses.

Sure, it'd be better than witch hunting (http://news.ycombinator.com/item?id=305192)

I don't know what "Money, Media and Power," is, but there are actual economists who are critical of the fractional reserve system. Mostly, they are of the Austrian School, but there are some Neo-Classicists (mainstream) economists who see problems with a system that allows banks to loan out money that they don't have.

You are right. His comment was off in left field though: "fractional reserve banking invariably increases inequality" - something he even goes so far as to label a "fact" (citation needed!). I think if you run the data, you would not find such a correlation, and that things like taxation and redistribution policy are more correlated to the gini coefficient. In any case, there are appropriate forums for the discussion of these things (like peer-reviewed journals) where knowledgeable people can comment.

If you ever looked at the projections of the gini index you would already know that the middle class will soon be a thing of the past. That's an obsolete argument, my friend, and I would encourage you to not participate if you don't want to encourage a debate on the economics (considering this thread was voted up by the HN community and has to do with economics and not startups).

Thanks for playing though!

Look at the debt list of the world. Very few countries in the world are seriously in debt, only about 15 or so. The rest have positive cash balances.

What I know is that the age of Gold was the age of aristocracy. The age of paper money was the age of democracy. I prefer to learn from history than believe what some guy on a message board tells me.

Well, sure, if everyone starts shorting paper, then that's not so good. But if a small part of Hacker News does, what's the big deal?

Have you seen the US debt lately?

Yeah, it's pretty much on par with what you'd expect:

http://www.nationmaster.com/graph/eco_cen_gov_deb_tot_of_gdp...

http://www.nationmaster.com/graph/eco_deb_ext-economy-debt-e...

That's a useful link. U.S debt is perfectly within normal bounds for its income.

Things have changed a bit since 2005.

http://www.youtube.com/watch?v=-DJIVQIRIHs

Not really. It's now closer to 60%. It's not off the charts, and is a lower percentage of the GDP than the next two largest economies (Japan and Germany, based on current CIA World Factbook numbers).

Well you're getting warmer:

1) Yes, 2007 is a little closer to 2008. 2) Yes, the debt increased to 60% of GDP in 2007, up from 47% in 2005.

Can you extrapolate that, especially considering our current situation?

Anyway, we've deviated a bit. You can't refute the fact that our fractional reserve system is debt-generating by nature. I really question your intelligence if you think we're going to stop invading countries anytime soon.

I'm not trying to argue about how bad our debt is relative to our GDP (even though we know that's the case). Re-read what I originally stated at the very top.

This is still silly. You're starting with some true things:

- The US has a fractional reserve systems and debt is a pseudo-currency within fractional reserve systems

- The US has a significant national debt

- The US invades foreign countries and has problems with class structure and poverty

However, your attempt to link them fails horribly in light with the last point not being true of countries which have proportionally more debt. There's not even correlation, much less a reasonable argument for causation. Honestly, I don't really care one way or the other about the fractional reserve system. I'm not starting with a particular viewpoint and trying to defend it. I'm just pointing out that your argumentation is flawed.

Forget it ;) You are one of those guys who just wants to look at the facts for what they are, and you never want to draw conclusions about anything. You look at a robbery and see that items are missing, but you could never draw an assumption about how it happened, or who took the stuff.

If you want to be spoon-fed your information in order to have the dots connected for you, and not spend much time or effort on thinking: re-read what I've said, and this time don't get stuck in tunnel vision looking at only the facts because you have some preconceived notion of the US economy.

The debt became that way when the U.S switched to a father-son, husband-wife presidential system.