> Right, because the banking system can always create dollars out of nothing to satisfy any outstanding liabilities.
Can they though? Don't they create new liablities with this? Effectively ending in "finance debt with more debt" scheme that has eventually got to collapse?
It’s a category error to confuse household liabilities with sovereign liabilities. So long as a sovereign currency issuer retains sovereignty it can expand its balance sheet freely. And yes through gross mismanagement it could provoke a revolution and thus lose sovereignty.
They’re not?
> you cannot have a bank run anymore. It's not possible.
Right, because the banking system can always create dollars out of nothing to satisfy any outstanding liabilities.
> Banks are backed by the FDIC which in turn is backed by the Fed
The Fed is a creature of Congress. It’s all sovereign currency issuance.