Coins and Money

Electronic money are very different from paper money!

EspeciallyI recently heard a finance professor significant it was basically absolutely no difference between paper money and electronic money under today?s nummular system. Well he is right for 99% of the time, but I am not interested only in 99% of the era, I am interested also in the tail events, in definite when we are in the middle of a tail event. When it comes to bank runs there is a big difference between electronic money and paper money. What I am thinking about is the two types of the right stuff bank-runs that exist under today?s fiscal system. Most bank-runs so far have been electronic, but what the banking system feared the most was a noble old time massive paper currency bank run. Today?s financial system is a fractional banking FIAT money system. FIAT money basically means the money is backed with nothing, but faithfulness in the government and the central bank. Fractional detachment auxiliary banking basically mean the banking system can distend the initial reserve money supply by about 10 times (well based on the supply requirements in each country, credit burgeoning), this is not my fantasy, but is described in several well known books on macro saving. Well that is in theory, the banks have often found ways around this to augment the money supply much more than the restrictions set by the reserve requirements would initially earmark. The high-powered fractional banking was one of the electric cable causes of the massive bubble that now is bursting. Furnishing and demand to set the price of money does not effort well in a fractional banking system. But that is another story (with many opinions), now back to electronic money, paper money and bank-runs. A bank run is when people unconfined faith in the banking system or in a bank or in series of banks and run to the bank to take out their money. But with more than 90% (such a proportion could change quickly) of all money only consist as numbers in computers there...

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