I ask because since our money is backed in value (a precious resource like gold and oil) and doesn’t leave the country, doesn’t it also mean that our wealth remains intact as a nation regardless of whether or not the bank has it? (Ie, us citizens have it, so it doesn’t matter if it’s in a bank or not- the wealth is held by a U.S. citizen).
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It does (have a serious economic impact)! It’s called a Bank Run and there are many examples of it throughout history. Value is based on TRUST because The US dropped the gold standard (the store of value you mentioned) back in 1971 to instead be backed by Debt. Fractional Reserve banking is the reason Bank Runs are possible.
Check out the story of John Law and the creation of Paper money. The Vatican and the Knights Templar are credited with creating the first “Credit” system.. no pun intended… to combat highway thieves and may arguably have been their biggest contribution to society. The battle of the Currents (T. Edison vs. N. Tesla) funded by J.P Morgan and George Westinghouse. So many great stories!
Banking has a fascinating history! It’s full of Guts and Glory, Crime and Corruption. Enjoy the rabbit hole!
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