I never understood this rule and thought it was intended to be a tongue-in-cheek wink at the federal reserve. Now after reviewing this rule, it is actually closer to reality than I thought and is actually a useful teaching tool for children. One shouldn't use it as an object of scorn, rather a demonstration that the 'monopoly money' is only a promise from the bank to redeem your note for something the bank has in its custody.

In today's world, the only thing the bank has in its custody is the debt you create by promising to pay interest on a loan they lend out to you. It seems circular, but remember currency itself circulates within an economy and this is one of the mechanisms that helps it retain its value absent any potential hard asset.