kjj, I think it's this part:
A commodity has full or partial fungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them.
Buy a fancy printer and try making your own "Federal Reserve Notes" and see how the market (and the cops) treat them.
You've never heard of a loan, have you? When you take out a loan, your bank produces dollars that did not exist previously. No one cares which bank produced the dollars in your checking account, and no one even knows.
It is only physical paper dollars that have monopolized production, and those are a tiny, tiny niche in the dollar economy.
Actually, I have heard of loans.
The monetary base (Federal Reserve Notes and deposits) can only be created by the central bank. It's true that other banks can create checkbook money as debt and we call those IOUs "dollars," but note that you still have to be a member of "the club" to do so. ANYONE can make bitcoins and the coins they make aren't IOUs for the "real" money; they ARE the real money.
EDIT: And banks' ability to create checkbook money is (in theory) constrained by the size of the monetary base as a result of reserve requirements.
Meh. Turn the world 90 degrees and paper dollars become bearer certificates (IOUs) for checkbook (real) money. It is really hard to come up with an argument for one being more "real" than the other than wouldn't apply equally well from the other side.
And in reality, banks make loans first, and then seek reserves second. The real limit to the money supply is the product of the creditworthiness of borrowers times their desire for loans. The reserve requirements are impotent in terms of the money supply, that is they don't
actually prevent any loans from happening, but they do sometimes reveal weaknesses in specific banks.
And yes, you do have to be a member of the club to "invent" money for loans, but it is a damn big club. Technically, that distinguishes from "anyone". I haven't checked, but I suspect that becoming an orange grower or pork belly farmer (or a producer of COMEX-able gold bars) is a harder club to join than banker. (
Cletus isn't parked outside the Chicago Mercantile Exchange building with a truck full of pigs waiting for his short to go to delivery, he operates through a co-op and a broker and inspectors and regulators and... )
