We don't really have fractional reserve banking. We have credit creation banking where banks create deposits when making loans. The result? It's not the lender (= the ultimate holder of the deposit created) who makes the decision to lend. It's the bank.
What does it matter? Banks can create purchasing power much more elastically than would happen if you wait for the wealthy to lend.
Is that good or bad? It depends what the new credit is created for. If it's for productive business investment it's great - non inflationary growth. If it's for consumption or asset purchases it's bad as it causes consumer or asset inflation.
Once you have given up an anchor such as gold credit growth needs to be managed some other way. Central banks have decided to target consumer inflation, completely ignoring asset inflation. Effectively money held by investors is not counted by the fed. You can predict what will happen: banks will reorient towards lending for asset purchases, asset prices and debt will soar. Inequality will skyrocket etc.
So fundamentally the money creation process in the banking sector when combined with the 2% consumer inflation target virtually guarantees an asset/debt supernova which will ultimately destroy the currency. And the worst is - nobody seems to care.
It might be that they've hit the end of the road now though as asset inflation turns into consumer inflation when retiring asset holders and wage earners bid for the goods and services provided by a shrinking working population. That's when it will become clear that asset inflation is not wealth. You can't divide asset prices by consumer inflation to get real wealth - got to divide by asset inflation which has been running at ~8% per year.
regarding fractional reserve banking, as in most things, i suspect that it has helped the process of economic growth, but is certainly not the driving force, or perhaps it has helped accelerate the process. as to the dollar's reserve status, i agree completely and appreciate everybody who pushes bak against this narrative.
Regarding the de-dollarization narrative: it's a nice story, it seems logical, and you probably can argue that something is already in motion. However, that doesn't mean we aren't far away from a change in the international currency order.
About fractional reserve banking, I fear I have to disagree - printing money (and fractional reserve banking is essentially nothing else) never leads to quicker or more sustainable economic growth, and neither has it accelerated the process. It just pushed up prices to another level and enriched creditors at the expense of debtors.
Elastic money does allow the economy to grow when faced with huge levels of inequality at the cost of escalating debt. Can be good in the short run. But unless closely managed catastrophic in the long run. And its never managed well.
We don't really have fractional reserve banking. We have credit creation banking where banks create deposits when making loans. The result? It's not the lender (= the ultimate holder of the deposit created) who makes the decision to lend. It's the bank.
What does it matter? Banks can create purchasing power much more elastically than would happen if you wait for the wealthy to lend.
Is that good or bad? It depends what the new credit is created for. If it's for productive business investment it's great - non inflationary growth. If it's for consumption or asset purchases it's bad as it causes consumer or asset inflation.
Once you have given up an anchor such as gold credit growth needs to be managed some other way. Central banks have decided to target consumer inflation, completely ignoring asset inflation. Effectively money held by investors is not counted by the fed. You can predict what will happen: banks will reorient towards lending for asset purchases, asset prices and debt will soar. Inequality will skyrocket etc.
So fundamentally the money creation process in the banking sector when combined with the 2% consumer inflation target virtually guarantees an asset/debt supernova which will ultimately destroy the currency. And the worst is - nobody seems to care.
It might be that they've hit the end of the road now though as asset inflation turns into consumer inflation when retiring asset holders and wage earners bid for the goods and services provided by a shrinking working population. That's when it will become clear that asset inflation is not wealth. You can't divide asset prices by consumer inflation to get real wealth - got to divide by asset inflation which has been running at ~8% per year.
regarding fractional reserve banking, as in most things, i suspect that it has helped the process of economic growth, but is certainly not the driving force, or perhaps it has helped accelerate the process. as to the dollar's reserve status, i agree completely and appreciate everybody who pushes bak against this narrative.
Regarding the de-dollarization narrative: it's a nice story, it seems logical, and you probably can argue that something is already in motion. However, that doesn't mean we aren't far away from a change in the international currency order.
About fractional reserve banking, I fear I have to disagree - printing money (and fractional reserve banking is essentially nothing else) never leads to quicker or more sustainable economic growth, and neither has it accelerated the process. It just pushed up prices to another level and enriched creditors at the expense of debtors.
Elastic money does allow the economy to grow when faced with huge levels of inequality at the cost of escalating debt. Can be good in the short run. But unless closely managed catastrophic in the long run. And its never managed well.