How Money is Created

As OSE moves forward to create real economies, and therefore real money, it is important to understand what money is. Here are some explanations of how money is crwated. This is important to understand and view of modern possibilities with distributed Ledger's of the blockchain to create distributed validation mechanisms for money.

[1]

OSE Assessment

• The Positive Money people above [2] propose than instead of banks reading money out of the thin air by fractional reserve loans - the government should instead perform this function directly. This means abolishing fractional reserve banking and declaring the money supply - by creating and destroying money. From the OSE perspective, both of these approaches are inherently flawed based on their centralization - in the hands of profit motive banks on the one side, and in the hands of modern olitbic government on the other. To update the logic to the digital age, the distributed Ledger of the blockchain can serve as a distributed Clearing House of economic validation. The question of how to make this work, outside of speculative existing options such as Bitcoin or etherium, remains to be determined. From the OSE perspective, the working mechanism must include backing of money with reality or real production and real Goods, just like gold used to back mainstream currency historically.