> With fiat money, the government basically doesn't owe you anything, but it's still a debt for the government and an asset for you in accounting terms.
You don't understand how money works. “Money is created by the government” is a myth. In western countries (and most of the world, including China!), money is created by private banks and the money on your bank account is a debt from some guy somewhere (likely a mortgage, a student loan or some corporate debt).
There are multiple definitions of money. You are using what the Fed calls the "M2" definition. I have in mind the "monetary base" definition.
Why are bank accounts denominated in units of currency? It's because demand deposits are an extremely close substitutes of actual currency. Anyway, they work the same way. Money in the bank is an asset to you, and a liability to the bank.
And cash is a tiny fraction of the money supply. (There is not a single bank in the US that could withstand a bank run, there's just not enough bank notes in circulation).
Under fractional banking, almost all money is created via debt. Government issues debt which is bought up buy banks which allows the government to issue new money including cash. It is purely created from thin air.
The asset I put in bank as deposits are too derived via this mechanism. It is an asset to the bank because they have lent it to the government. Part of it is a liability to them because i have lent it to them to further loan it out in multiples which become their assets ..... infinite recursion.
> Under fractional banking, almost all money is created via debt. Government issues debt which is bought up buy banks which allows the government to issue new money including cash. It is purely created from thin air.
Except fractional reserve banking isn't an accurate model of how money works today. Money is created by bank loans, not deposits - a bank with zero deposits could still lend money.
You don't understand how money works. “Money is created by the government” is a myth. In western countries (and most of the world, including China!), money is created by private banks and the money on your bank account is a debt from some guy somewhere (likely a mortgage, a student loan or some corporate debt).