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Fractional Reserve Banking And “Fraud” Brian Romanchuk

Summary:
Although I like the title of my banking primer “Fractional Reserve Banking and its Discontents,” the problem is that I need to deal with some really loopy theories.The economist Robert Solow provided us with a very good quote regarding the dilemma of such discussions.Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I'm getting tacitly drawn into the game that he is Napoleon Bonaparte. In the area of banking disputes, we run into internet Austrians who argue that fractional reserve banking is “fraudulent” based on alleged historical arguments. I have done my best to blank this nonsense out

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Although I like the title of my banking primer “Fractional Reserve Banking and its Discontents,” the problem is that I need to deal with some really loopy theories.

The economist Robert Solow provided us with a very good quote regarding the dilemma of such discussions.

Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I'm getting tacitly drawn into the game that he is Napoleon Bonaparte.

In the area of banking disputes, we run into internet Austrians who argue that fractional reserve banking is “fraudulent” based on alleged historical arguments. I have done my best to blank this nonsense out of my skull, but I will run through what I believe was the logic....

Bond Economics
Fractional Reserve Banking And "Fraud"
Brian Romanchuk
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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