Yes, banks do that already, it's called Fiat money

Hi W, This was actually a scientific experiment, the first, that has proven that banks can create money from nothing.... Dhan

They already do/are.

they do, it's not a secret, and it's not as bad as it sounds. many LETSs work the same actually. the problem is, like with many things, the large scale; all the middlemen that are introduced, that can find loopholes, and that can profit from information asymmetry.

It is when the Fiat bubble busts.

Hi, A currency must have a real value, though.... Dhan

Not according to the Federal Reserve..

Hi W, Exactly... Dhan

Define “real value”.

At the end of the day money is information. That’s all it is.

You ask me to mow your lawn. I do. Eventually I want society do something for me in return, when I need something. We just have to write down that I mowed the law for you, and society has to trust this information. That’s the purest form of money. The problem is, how to trust that this information is correct? We both could just have made this up.

But basically, that’s how LETSs work. You “just” need to establish trust in those local communities.

And banking nowadays works the same, just on a bigger scale.

A medium of exchange, like gold, is just a tool to store and exchange the information of value. But it is an intermediate step. The nice thing about it is surely that it requires no intermediary institution. But only if you use gold coins themselves. Historically, people eventually used receipts, hence established middlemen, hence fractional reserve banking came to be. Trust was introduced again in the equation, and that trust was broken.

Hi Herz, Interesting. What would happen if i could make gold from ,for example, salt or minerals? And what if there was a lot more of this "invisible" gold than the "normal" metallic gold we know. This is NOT a fantasy but a reality... Dhan

then gold would become inflationary and worthless

(if it required not much energy to turn minerals into gold that is)

Exactly

At Herzmeister

Hi, I*t is fairly simple to turn this ceramic ( de-clustered ) gold into metallic gold. I am sure that the big metal companies are already doing it.
In seawater and also in certain minerals on land there seems to be 10,000 times more of this type than the normal metal form...* Dhan

Did not know that, at Dhan.