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Owning a thousand bucks lets the lender loan out ten grand, at interest, and away we go.

no regulated bank can have a ratio anything like 10X. they have to maintain a liquidity reserve and also have assets on the books equal to most of the rest.  Ordinary banks cannot print money.  

If you hold to the gold bug theory that fractional reserve bank are somehow a fraud on the world, just how would you propose to have a 100% reserve bank work?  Just a vault service charging you fees to sit on your gold or other specie for you?  There isn't enough gold in the world to replace fiat money with.  Barter?

by HiD on Fri Jan 19th, 2007 at 07:21:56 AM EST
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