Debt money and the world of international finance all seems like some kind of alchemy to me.
"Debt money" is a confusing term and I would generally stay away from sources that use that language, because they are usually propagandists in my experience.
Money is money -- money is exactly what you think it is (cash and coin, bank accounts, etc.) Those who mystify it, do so because they have an agenda. There is nothing about money that is inherently more complicated than any other good. In fact, since money is the closest asset to being a "pure number", it is in many ways much simpler than other goods.
In
Mystery of Banking (IIRC), Rothbard gives a breakdown of money starting from the concept of warehousing. Warehousing is the industry that has to do with storing things like wheat, oil, and other commodities. When you store a good of a given grade with a warehouser, you receive a warehouse receipt for the quantity you deposited, including its specific grade. When you later want to redeem the warehouse receipt, you expect to be given the full amount of the stored good,
at the same grade. You would not deposit Grade A wheat with a wheat warehouse, and then be satisfied to receive moldy wheat when you return to redeem your warehouse receipt, or to only be given 10% of the wheat you deposited. In the same way, Rothbard argues, the basis of banking is just "money warehousing" -- the gold depositor who deposits 100 gold coins with his bank, expects to return later with the deposit receipt for that account and receive fully 100 gold coins of the same weight and fineness as those he deposited. He will not accept 100 50% silver/gold coins, nor will he accept 90 gold coins instead of 100 -- the deposit receipt is for fully 100 gold coins of some weight and fineness and he expects exactly what he deposited in return.
People in society generally assume or feel that this is how banking fundamentally works, even if it's "very sophisticated" and not easy for the normal person to understand all the details. But what central banking and fiat money break is
this assumption -- in fact, the modern banking system does not
at all warehouse your money in this way, nor return it to you in the same amount and quality at which you deposited it. This is the meaning of that claim you hear often that "the dollar has lost 90% of its value since 1971 when Nixon closed the gold-window." The point is that $100 deposited at your bank in 1971, even if it is returned
numerically, is not returned in its real value. You do not receive one hundred 1971 dollars' worth of value when you redeem your original deposit, because inflation has eaten away 90+% of its actual purchasing power, and you were not compensated for this. Nor is this eating away of the value of your deposit the result of having foregone investment, as is often suggested. It is true that a mere deposit (instead of an investment) is not "generating wealth" because it's just sitting there, collecting dust, but this is a separate topic (I won't go into it here to avoid too long of a post), but just take my word for now that this is an intentional confusion that is often injected into discussion of modern banking to confuse people and deflect attention away from the real issue.
And what is the real issue? That when the central bank "creates money", it is doing nothing different than any ordinary criminal counterfeiter does when they print counterfeit bills. They are literally just printing money out of thin air, no matter how much liturgical ritual they surround it with, no matter how grave and stupendous the charade, no matter how long-faced the actors playing their roles upon the stage -- it's all an elaborate pretense whose purpose is to make the obscene seem sacred, to make the criminal seem lawful.
In truth, they are violating Torah --
Deut. 25:13 - Do not have two differing weights in your bag-one heavy, one light.
Proverbs 16:11 - Honest scales and balances are from the LORD; all the weights in the bag are of his making.
Micah 6:11 - Shall I acquit a man with dishonest scales, with a bag of false weights?
They are thieves, in fact, they are the greatest thieves
ever, in history. They have stolen oceans' worth of wealth, and mostly just lit it on fire (in many cases quite literally).
Why is Bitcoin, which is purchased with debt money and resides in cyberspace, sound money?
The easiest way to understand Bitcoin is to look at it from the standpoint of what we call "the marketplace of money", or "a free market in money production". The US dollar is named after the
Thaler or "Joachimsthaler" which was a silver coin struck by an Austrian noble family that happened to be, at the end of the 18th century, one of the most widely used coins for international trade. This was because of its high reputability, its good design, anti-counterfeit features, its optimal weight, and its relative political neutrality, not being issued by a national government. The point is that the founding Fathers chose the Thaler/Dollar as the national currency because it was a "market winner" -- it was in wide use everywhere around the world. They didn't worry about the details of why the Thaler was in widespread use, they relied on the wisdom of the market to sort that out. In the same way, those who use Bitcoin don't need to understand every detail of how/why it works, all they need to understand is that Bitcoin is a competitor in the world marketplace of currencies -- most of which are subsidized by their national government and operated as a monopoly -- and it is holding its own against them. Bitcoin's death has been predicted as many times as the political death of Trump... but it's still standing. Lots of smart people who
do fully understand how it works have invested every penny they have into it. It's too old to be a pyramid scheme and you'll never get robo-called by "Bitcoin Corporation" because there isn't such a thing, Bitcoin is an open standard (kind of like the Internet itself) and no one agency controls the Bitcoin network, something that the biggest Bitcoin players have very carefully ensured (to secure their own Bitcoin assets).
