Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Ilaine who wrote (11741)	12/12/2001 12:59:53 AM
From: LLCF	Read Replies (1) of 74559

<What I said is that, under 100% fractional reserves, banks can't create credit. > Actually that's not what you said: <Don was advocating that banks maintain 100% reserve. If a bank has to maintain 100% of deposits, then it can't loan money.> Big difference, you still have the function of a financial intermediary which simply needs to match the duration of it's assets and liabilities on a 1:1 basis. <Advocating 100% reserve money is like advocating that if everyone in the world spoke the same created language, Esperanto, there would be fewer misunderstandings and more peace. Nice idea, never gonna happen.> Probably true! :) DAK

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