Is Fractional Reserve Banking Ethical- Part I- An Introduction

98% of money in circulation is created (out of thin air) by private banks when they issue loans. Especially in light of massive public debt related to the COVID economic crisis, there are growing calls to end this debt-based system of money creation. Government doesn’t need to borrow money (from banks or anywhere else) to fund deficits. Most have the power to issue the money directly into the economy and to pay off existing debt with government-created money.

Inverted logic

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Introduction:

The norms of modern banking are something that most of us take for granted. Few ever question the inner mechanics of such transactions we engage in daily. However, banking has been steeped in a fog of mystery due to complex operations and seldomly failing to fulfill any obligated services. Beyond questioning the functions or internal workings of modern banking even fewer people recognize that most people are participating in a fractional reserve banking system. In a random survey of average people, you will be hard-pressed to find anyone aware of what fractional reserve banking entails nor any intimate understanding of its implications. That is to be excepted considering this is a niche area of expertise that is truly the domain of an economist, banking/ financial specialist. This assumption relieves us of any responsibility to cultivate a better understanding of these systems. After all, this…

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