Fractional Reserve, Base Money & Bitcoin with Matthew Mežinskis
Where to find the show
Download Episode MP3 File
The file will open in a new window. Click down arrow to download the file.
SHOW DESCRIPTION
Matthew Mežinskis is the creator of the Crypto Voices podcast and Porkopolis Economics website. In this interview, we discuss the definition of money, the importance of credit and fractional reserve banking, and how “not your keys, not your coins” equally applies to bank deposits.
- - - -
WBD528, “Everything You Know About the Economy is Wrong with Jeff Snider”, was one of our most discussed shows of recent months. Jeff presented a number of challenging and yet fascinating ideas, that have now spurred a second interview responding to some of the issues raised.
A principle issue was Jeff’s assertion that the system lacks understanding and control. When asked whether he could define money Jeff replied “No, I actually don't. That's I think that's the general problem. Even the Federal Reserve or central banks, economists, they can't define money either.”
Matthew Mežinskis respectfully disagrees: he thinks that there are tried and tested specific definitions that make money comprehensible to all. Matthew promotes the idea that money is chiefly a medium of exchange, and that there are two distinct types of money: base money that confers ownership, and fiduciary money which is a claim for ownership.
Further, Matthew is of the opinion that, whilst criticism of the Fed is valid, it isn’t the ignorant and inefficient organisation some portray it to be. From this cascades a series of additional opinions that are at odds with the mainstream narrative within Bitcoin circles: credit is a natural means of human interaction, that has enabled civilisations to flourish; whilst fractional reserve banking is a necessary part of capital allocation within the economy, and cash use continues to be vibrant.
And yet, in line with the truism that Bitcoiners are a broad church, Matthew is a strong advocate for Bitcoin. He sees that it promises real improvement to the current economic system. He just sees it through a different lens. In this worldview is Bitcoin an evolution rather than a revolution?
TIMESTAMPS
00:01:22: Introductions
00:02:43: Definition of the eurodollar and how it came to be
00:06:50: Definition of money and the history of credit
00:19:07: Explanation of fiduciary media
00:34:38: The global value of fiduciary media
00:47:15: Fractional-reserve banking
00:53:24: The transfer of assets and liabilities, and base money
00:58:51: The difference between base money and fiduciary media
01:06:29: Banking in a hyperbitcoinised world
01:15:31: Stablecoins are eurodollar analogous crypto projects
01:19:10: CBDCs won't win
01:22:29: Final comments
SUPPORT THE SHOW
If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:
Become a Patron and get access to shows early or help contribute
Make a tip:
Subscribe on iTunes | Spotify | Stitcher | SoundCloud | YouTube | TuneIn | RSS Feed
Leave a review on iTunes
Share the show and episodes with your friends and family
Subscribe to the newsletter on my website
Follow me on Twitter Personal | Twitter Podcast | Instagram | Medium | YouTube
If you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.
SPONSORS
SHOW NOTES
Connect with Matthew:
Mentioned in the interview:
Five years later, Panama Papers still having a big impact - ICIJ, Apr 2021
How David Graeber Changed the Way We See Money - The New Republic, Sep 2020
A History of Interest Rates: 322 (Wiley Finance) Paperback - by Sidney Homer, Aug 2005
Shelling Out: The Origins of Money - Satoshi Nakamoto Institute, Nick Szabo, 2002
David O'Keefe: The King of Hard Currency - History, Jul 2011
Show 11: George Selgin - Money, Banking & Bitcoin - Crypto Voices, 2017
What You Should Know about Free Banking History - Cato Institute, Apr 2015
Bitrefill Review: A Beginner’s Guide - 99Bitcoins, Jul 14th 2022
Money Stock Measures - H.6 Release - July 26, 2022 - The Fed
Cash in circulation is soaring, and that usually means good things for the economy - CNBC, Jan 2021
Central bank digital currency cast aside in Japan - Asia Times, Jul 20th 2022
Other Relevant WBD Podcasts:
WBD536: How Crypto Replayed the 2008 Financial Crisis with David Morris
WBD528: Everything You Know About the Economy is Wrong with Jeff Snider
WBD449: Chaos in the Bond Market with Greg Foss & Lawrence Lepard
WBD359: Central Banking, Bonds & Inflation with William Elman & Greg Mercer
WBD353: From the Petrodollar to a Bitcoin Standard with Alex Gladstein & Nic Carter
WBD297: Questions for Tether with Paolo Ardoino & Stuart Hoegner
WBD036: The Threat of Fractional Reserve Bitcoin from Wall Street
WBD032: The Looming Debt Crisis and Central Banks for Bitcoin