Pretty much like fiat currency, backed back thin air, or IOUs on IOUs. It has no intrinsic value, nothing, zilch, it is just made up currency.
Well said Mr.Bailey, let me dig out the definition of fiat currency:
“Fiat money is a currency that lacks intrinsic value and is established as a legal tender by government regulation”
It is created to allow governments to overspend on public works, social programs and wars. It robs the future generations for the present overspending and saddles them with the debt, all in the name of economic stimulation and the whims of politicians.
Every year the government prints more money, your fiat currency is worth less, it is continually debased and will eventually be worth nothing like every other fiat currency.
The Bank of England has no money, it just creates fiat currency out of thin air to buy bonds which are created by the Treasury (or DMO now), which then releases it to the banks to create liquidity.
What do the banks do? Fractional reserve lending which is where most fiat currency is created, again, out of thin air.
Ponzi scheme? The current global financial system is a ponzi scheme, but don’t worry look over there at naughty crypto currency and assets with store of value over time, like precious metals, they are bad, real bad!
Remember this as well:
“In order for this system not to collapse it must always grow. And because every new pound created is backed only by debt on which interest is due, there can never be enough pounds in existence to pay down the debt. The currency supply must continue to grow exponentially in order to service the constantly compounding debt load, until one day when it will all collapse under its own weight.”
What a beautiful system, no wonder they want to trample the decentralised crypto currencies where it is immutable and infeasible to double spend or fractional reserve lend, why would anyone want that?
