Inside vs Outside Money
Typology
Chor Pharn:
"The modern financial hierarchy is built on two kinds of claims.
Inside money is created within the private sector—bank deposits, money-market funds, repo credit. It expands liquidity but cannot settle on its own; every instrument depends on another balance sheet.
Outside money is issued or guaranteed by the state: central-bank reserves, sovereign bonds, or historically, gold. It settles obligations without reference to another promise.
For fifty years, inside money dominated. Private leverage multiplied credit, while the U.S. Treasury and Federal Reserve underwrote the entire structure. The architecture was efficient because it deferred settlement indefinitely.
That deferral is ending. Demographics, energy constraints, and political limits on leverage mean the world can no longer expand by adding promises faster than proof.
The search for outside-money anchors—collateral that clears without belief—is the essential story of the second half of the 2020s."