Originally Posted by Alecthar
Expand upon the concept of currencies only being "methods of debt transference." When a currency is exchanged for goods and services, what debt am I transferring by using it? To whom is that debt now transferred to by its use? Who is the debtor, and who is the creditor? What is their relationship to those utilizing a currency for its intended purpose? Given that fractional reserve banking is the basis of our global banking system, which currencies would you assert remain "mediums of exchange"? Assuming that fractional reserve banking is discontinued, what system should replace it?
Many things contribute to the devaluation of a currency over time, would you consider the printing of additional bills more or less damaging to a currencies value than fractional reserve banking? Would you consider the system of fiat currency to be more or less damaging than fractional reserve banking?
Such corrupted currencies answer those questions for me. "This note is legal tender for all debts, public and private." really does say it all. This type of currency has no inherent value, and isn't in truth exchanged for goods or services. What it does do is reduce your overall debt load by offloading that debt onto others. This type of thought turns a currency into a promissory note, assuring you the currency has value only by its ability to put other people into debt. That is not a medium of exchange, that is a method of financial indentured servitude.
Under this kind of system, every person is in debt. By "paying" for something, you take debt from the person you are paying in exchange for said good. Everyone is the debtor (although you could make a claim that some people manage to offload the sum of their debt to other people, that would only apply to "the 1%").
Very few people utilize currency for its intended purpose, and the dominant currency of the planet openly admits to being a promissory note. I'm not sure any "major" currency does remain a medium of exchange. I'd go so far as to bet that any attempt to create one would be shut down by some form of government.
As far as what "should" replace fractional reserve banking, I'm not sure of the whole solution. An actual currency (I recommend the Kilojoule note) that can be objectively valued in terms of the amount of work it takes to create a product would be one of the first two places I'd start. The second would be to eliminate "shadow banking", a system where banks loan each other huge sums of money to keep their books solvent and take advantage of the international date line to simply keep rotating the loans around rather than ever paying them off.
Fractional reserve banking is a mathematical fallacy being propped up by trillions of dollars in cooked books.