Many people believe that cash, the paper printed by the government, is coextensive with money, and that bank deposits kept at private sector banks represent a claim on money. Neither of these is true. Instead, bank deposits are themselves money, created by a public/private partnership. They are the dominant form of money. An economist would tell you about the M1 versus M2 money supply here. As a sometimes product person in financial services, I’d just handwave and say “About 90% of what the entire world thinks of money is useful money and 10% is legacy paper certificates that banks will happily exchange for useful money.”

The infrastructure behind ATMs
from Patrick McKenzie (patio11) favicon