Long story, but my six-year-old son was asking me to explain gambling. I told him about how you go into a casino and give them money for chips. Then I was explaining Blackjack, and told him about betting $10 etc. on a hand.
He stopped me and asked me to clarify. Was the person betting chips or betting money? I had been using the terms interchangeably.
“Oh,” I explained, “you give the casino your money, and they give you chips that represent the money. So it’s like you are gambling with your money, it’s just more convenient.”
Then, as I’m continuing with the tutorial in Blackjack, of course my mind is building all kinds of parallels with fractional reserve banking. For example, would it be illegal for the casino to give players a loan of chips, that wasn’t 100% backed by the casino’s own funds? I.e. at any given time, could there be a run on the house? I would tend to think every chip in play is backed 100% by cash, but maybe I’m wrong?
If I’m right, isn’t it funny that commercial banks are allowed to do things that would be illegal for a casino to do?
And if I’m wrong, well then, uh, isn’t it funny that commercial banks operate just like casinos??!! (See what I did there?)