Hello doogsie1 thank you for the debate / discussion this is welcome TU.
History has told us loads of times that gold is money but sticks, shells and paper have also been used too. Gold convertibility for USD's was reneged on by Nixon on 15th August 1971 from memory. The constitution of the US may well state what you say I have not checked so have no reason to doubt you. The Fed will not convert Nixon stopped that. I have cashed in a $200 koala in Canberra to test the theory and did get $200 which was the face value and the teller had to go ask and was highly confused. This adds merit to your argument so I thought I needed to throw that in.
I can go and sell a painting or car for cash too but that does not make them money so I am not so sure about your broker definition. I am just being practical - cannot go and use gold to pay for bread so not currency. Money generally accepted as currency in this day and age because this is what we use. So I view gold as a highly important asset class.
Your definition of money - no argument at all. Currency no longer fulfills this it has become a means of exchange and nothing more.
Commercial banks - different story. I cannot imagine how one could go into liquidation (and it happens all the time in the USA) if they could print money.
I also question the existence of interbank lending for liquidity purposes or wholesale money markets where commercial banks go to borrow money for lending purposes.
I have spoken to people that deal with head of Treasury at major banks (commercial) and put all these arguments to them and they tell me it isn't so. They wish they could create money however this only happens at the Central Bank level according to my contacts. it makes more sense to me that this is correct.
Commercial paper has to be cash backed doogsie1 where did you get this information? I can imagine what the world would look like if commercial banks could print at will - or at all against assets clients bring to the transaction. Their profits would be astronomical so the printing at this level does make sense to me despite what I have seen and read to the contrary. As a serious analyst I have to question everything - have learned that in business.
We would be kilometres deep in cash by now all over the earth if the CBA, NAB et al could print. Their greed knows no bounds - nor their scruples in many cases.
