RE: Fractional Reserve Lending
October 20, 2016 at 9:59 pm
(This post was last modified: October 20, 2016 at 10:15 pm by The Grand Nudger.)
Would they buy me a fast run pcb plant? Would they build me a 4k sq ft home? Okay, okay, how about a nice new 4 door with chrome and sweet running lights? This all sounds suspiciously like an issue of whether or not a person prefers the government tit to private enterprise.
What's stopping the gov from just creating more money to make those hospitals anyway? Allowing banks to leverage the fractional provision doesn't stop them from doing that. Split the baby? Halve the fractional allowance and then print more of the other kind of iou? Truth is, they couldn't have that money. They were unwilling to do the things you've mentioned. They've allowed the banks to assume the risk of the loans, and they've allowed the citizens to accrue whatever debt they sign for and spend it how they intend to spend it. Central planning/free market. Here again, this is what frbs do better than full reserves.
Don't get me wrong, I'm not a big fan of the blip at the point of central banking and government backing the lines of credit these banks extend...but that's not a problem with fractional reserves vs full reserves, it's a whole different can of worms.
What's stopping the gov from just creating more money to make those hospitals anyway? Allowing banks to leverage the fractional provision doesn't stop them from doing that. Split the baby? Halve the fractional allowance and then print more of the other kind of iou? Truth is, they couldn't have that money. They were unwilling to do the things you've mentioned. They've allowed the banks to assume the risk of the loans, and they've allowed the citizens to accrue whatever debt they sign for and spend it how they intend to spend it. Central planning/free market. Here again, this is what frbs do better than full reserves.
Don't get me wrong, I'm not a big fan of the blip at the point of central banking and government backing the lines of credit these banks extend...but that's not a problem with fractional reserves vs full reserves, it's a whole different can of worms.
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