CB -
What I said is that, under 100% fractional reserves, banks can't create credit. Anyone can loan (saved) money if they are willing to forego consumption. That's not creating credit....
See if this is consistent with your understanding -
From Reisman, Capitalism, Chapter 12, Money and Spending, pg 514 -
"...The 100-percent-reserve system is logically urged only for checking deposits and banknotes (currency), not for savings deposits or time deposits. There is a crucial difference in that savings and time deposits do not represent spendable money as such. When an individual makes a savings deposit or a time deposit, he temporarily gives up the use of his money. He cannot spend the savings or time deposit as such. If he wants his money, he must go and withdraw his deposit or wait until it matures. He must obtain actual money. When a bank lends the proceeds of a savings or time deposit, therefore, it is not engaged in the creation of money, but merely in the transfer of a given amount of money from a lender -- that is, the savings or time depositor -- to a borrower. Under the 100-percent-reserve system, therefore, banks would continue to lend out savings and time deposits, just as now. ..."
Regards, Don |
