<< I consider the printing press (which is what fractional reserve banking is) a socialist weapon. In fact it is their biggest one. >>
Well, considering that socialism, strictly speaking, would outlaw profit, interest, and rent, how else could they achieve economic growth, except by printing it? Sort of the economic version of "publish or perish", eh?
<< In other words you cannot print money to lend it. Someone must save it first. >>
In a free market, shouldn't, for example, a depositor, a bank, a car buyer, and a car dealer be free to decide what percentage of the depositor's savings must be on reserve, what amount of interest the depositor will receive, and what amount of interest the car buyer will pay in order for the bank to extend to the car dealer the difference between the buyer's down payment and the car's purchase price? Why should a politician or bureaucrat in Washington or Albany decide that the bank must hold 100% of the financed amount in reserve, instead of allowing the parties to the arrangement to freely decide this percentage?
As I said, I haven't given much thought to this issue. So, allow me to ask a question that I think is theoretically relevant: Should the limit of coverage an insurance company can write be limited to 100% of the premiums plus paid-in capital the insurance company has already received? What would the history of GEICO have been under such a stricture?
Also, for the record, do you happen to know what Milton Friedman's position is on the Gold Standard and fractional banking? |
