The "Money creation in the modern economy" paper makes it clear that fractional reserve banking is not how banks work - a fractional reserve system is based on

The "Money creation in the modern economy" paper makes it clear that fractional reserve banking is not how banks work - a fractional reserve system is based on banks lending out deposits, which as you say is not true. > Money is not backed by anything except faith that the Government can seize the wealth of its citizens or tax the wealth creation of its tax residents. Money has always been "backed" by nothing more than confidence in its utility. How often have various governments and rulers throughout history either arbitrarily changed the amount or type of material used to back money or simply not had enough of it around to back up the money in use? Commodity money is just fiat money pegged to an arbitrary amount of stuff, you still have to trust the government to maintain the peg and have the required stuff somewhere.