Had a question for anyone who could give a half-way descent answer to it -
If the idea of sound money is growing, then why aren’t there (to my knowledge) any “sound” banks or credit unions? What I mean by this is, at a minimum, is banks who hold the value of money equal to deposits? Or banks that don’t loan non-existent money? Or at least banks that back the money they have by an equal amount of gold? Or something along those lines. I guess it wouldn’t be “sound money” by it’s literal definition, but at least a bank who does not necessarily need to rely on FDIC to pay back money it has lost.
Would something like this even make sense? Or at least be a step in a right direction - to at least show the public that sound money can in fact actually work?
Even assuming such a situation desirable, I don’t think, under the current system at any rate, it is practicable. When people’s deposits are guaranteed, and they can earn interest, and withdraw said deposits on demand, why would they choose a system which does not provide these services? It is the price of security, and frankly, with gold prices as volatile as they are, I wouldn’t want my savings backed by it now anyway.
I’m not sure what you mean by banks loaning “non-existent money”. Where does this happen? Banks lend money, but they cannot lend more than they have in deposits. Banks always hold enough assets to cover deposits, except that those assets are not always in liquid form. Some would argue that the increase in the money supply resulting from this can cause credit misallocation, but that does not mean that banks lend “nonexistent money”.