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RE: Velocity and the Death of Fractional Banking/Lending

in LeoFinance11 months ago

I long for the day when fractional reserve banking is a nothing but a dark legacy of economic ignorance looked back upon with scorn and derision.

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I do wonder about it though. I'm not convinced that it is a completely bad thing in itself, but when it is so tangled up such that the entire economy and banks are "essential" then there is a big problem.

I mean, the thing is that there's a real question about the degree it's permissible. One thing that needs to be clear is that any bank with fractional reserves needs to advertise the portion of cash assets it has at any given time and be restricted from changing them. The government has a lot of restrictions for this, but they tend to force banks to buy things that are risky with their non-cash holdings.