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Location: West Los Angeles and Rancho Palos Verdes
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Now I'm perhaps an old-fashioned guy, but if I say I have $100, it's because I have that amount, not a fraction of it. So regarding the ethics of fractional reserve banking, can somebody defend it, and make an argument as to how it's not just one big scam to create fictitious wealth?
Now I'm perhaps an old-fashioned guy, but if I say I have $100, it's because I have that amount, not a fraction of it. So regarding the ethics of fractional reserve banking, can somebody defend it, and make an argument as to how it's not just one big scam to create fictitious wealth?
Easy. Before fractional reserve banking economies were horrible for a lot of related reasons. Chiefly effective money supplies were always too low.
Now I'm perhaps an old-fashioned guy, but if I say I have $100, it's because I have that amount, not a fraction of it. So regarding the ethics of fractional reserve banking, can somebody defend it, and make an argument as to how it's not just one big scam to create fictitious wealth?
Limited money supply - literally not having enough dollars at any one time in the economy but high demand is what makes them valuable and store value. If the money supply was super constricted (by removing fractional reserve banking), it would even be more valuable to the point nobody would have enough money to do anything with - economic growth would be a fantasy.
It's not to say it's "fictitious wealth" but rather - money and it's supply is the way the Federal Reserve uses to control value in the economy. That's why they set inflation targets by influencing the supply of money through monetary policy.
Now I'm perhaps an old-fashioned guy, but if I say I have $100, it's because I have that amount, not a fraction of it. So regarding the ethics of fractional reserve banking, can somebody defend it, and make an argument as to how it's not just one big scam to create fictitious wealth?
Why defend it, when functionally it hasn't existed since the 2008 crash?
Of course they can. But that sort of binary Yes:No or Good:Bad approach misses the real question-- Scale.
The real Q: How much beyond 'reality' we can/will allow the 'fiction' to expand?
Then you can get into the piling up of unsecured debt and those scale issues.
Having these financial tools (like our own VISA cards) is almost always good for us.
Well, so long as we don't abuse it -- which we definitely have.
Depends on how fractional reserve banking is implemented. Currently is implemented such that small percentage of population enriches themselves far beyond what the rest of the population is able to, utilizing same system.
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