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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: yard_man who wrote (57039)3/29/2006 1:28:55 AM
From: Elroy Jetson  Read Replies (1) of 110194
 
There is no right rate apart from the market -- but there is no market interest rate in an economy based on fractional reserve banking.

In an economy with fractional reserve banking, as loan demand increases, the money supply also increases and interest rates usually decline. Just as perversely, interest rates will often increase as loan demand declines. Fractional reserve banking is the antithesis of a market economy. There is no "market rate" for money in a system of fractional reserve banking.

Without a central bank, fractional reserve banking is an obvious Ponzi scheme which periodically collapses wreaking havoc in the real economy.
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