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Backing of money
There is, in the end, only one possible backing of money, and that is human work. All the mechanisms of banking and finance tend to hide this basic fact.
Money originating from private sector debt is backed by a promise to work, to provide goods and services. We call this “productive money.”
Money originating from public sector debt is backed by a promise to tax. We call this “unproductive money” if issued in excess. As Mitchell-Innes noted, it creates an illusion of wealth: “the more government money there is in circulation, the poorer we are.”