>If you combine this with the fact that banks work on fractional reserves, then there'd end up being infinite money... but there isn't because it's not true. I

>If you combine this with the fact that banks work on fractional reserves, then there'd end up being infinite money... but there isn't because it's not true. In practical terms the only limit to the amount of new money is the amount qualified borrowers are willing to borrow. Banks that don't have enough reserves typically borrow from other banks or from the central bank. The central bank (in the US, at least) isn't bound by reserve limits at all and can create money by changing a number in a computer. The lack of lending by banks isn't a problem in and of itself. It's a symptom of the underlying problem, which is a lack of economic activity that would require borrowing.