Meanwhile, what about the grommets that ‘B’ just bought?

Now suppose management of ‘A’ and ‘B’ decide to merge the two companies; ‘A’ and ‘B’ merge to become Company ‘Z’.

So what happens? Well, the books of ‘A’ and ‘B’ are consolidated; the total assets and total liabilities are added, and appear in the books of the newly created Company ‘Z’.

But wait; if ‘B’ owes ‘A’ (payable of ‘B’, receivable of ‘A’) and ‘A’ and ‘B’ no longer exist, will these numbers be transmitted to ‘Z’; that is, ‘Z’ owes 100 monetary units… to ‘Z’? Whoa. No way; the items cancel each other… any debts or payments due to other companies will stay… but the ‘A-B’ transactions cancel out. The IOU is consolidated out of existence by the merger of two previously independent companies.

Meanwhile, what about the grommets that ‘B’ just bought? Clearly these are now in the inventory of ‘Z’; and ‘Z’ will incorporate them in its product line of widgets. The real stuff stays; the IOU’s disappear. Real stuff is potentially money; real money cannot just disappear. IOU’s are not money; they can and do disappear. It’s that simple. Now substitute Treasury and Federal Reserve for ‘A’ and ‘B’, substitute treasury bills and Fed notes for grommets and widgets!

The bottom line; real stuff, ‘pure’ assets can be ‘real’ money… good or not so good. IOU’s that are assets/liabilities cannot. Unfortunately, the word asset is misused, applied to both ‘pure’ assets and to promises that are assets in one hand but liabilities in another. This is the core reason why the fake money system we currently live under is dying… and only real money comprising real assets can save our economy… and our civilization.