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Yes, except fractional reserve banking hasn’t been the basis of banking since at least the mid 1930s.

by qubex 7y ago

fennecfoxen 7y ago
Voted down as Fundamentally Incorrect. You must have misread something somewhere.
- qubex 7y ago
  No, I haven’t misread... even the Bank of England subscribes to the endogenous theory of money nowadays: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... Furthermore, Islamic banking has never relied upon fractional reserve banking. So... no, not “factually incorrect”.
  - fennecfoxen 7y ago
    Okay, so you have located and subscribe to a heterodox economic theory. That's fine, and your theory may be legit. The theory that the New Deal substantially extended the Great Depression is ever-so-mildly heterodox, and I happen to believe it. I can sympathize. However, you are tendentiously representing heterodox economic theory as if it is mainstream; this is somewhat less than ideal, and impedes communication. And you go further, declaring that we abandoned fractional reserve finance in the 1930s. I am confident that even non-crank economists who subscribe to this theory will admit that the things that the original poster describes literally occur, to some reasonable level of approximation, and that the layout of money in a bank within US or European banking systems can therefore be meaningfully called "fractional reserve", even if endogenous-money theory is correct insofar as the underlying reserve multipliers are not a primary cause of changes in the total money supply (thus limiting the power of the central bank). Given that we are much less interested in the total money supply and central bank policy, and much more interested in the basic mechanics of banking and where money is and is owed, the topic you raise is incredibly irrelevant at best, and a sign of gross overreach. Finally, the US and European banking systems cannot be said to run on the principles of Islamic finance and your mention of Islamic banking here is 100% totally irrelevant. It is possible to advocate for this theory in discussions such as these. It may even improve understanding! This has not happened. Your posts do not promote understanding of economics or of banking, and you are not effectively advocating for this theory. I regretfully reiterate my conclusion that you are confused, and will note it is a further possibility that you are a crank.
vikramkr 7y ago
I think you might be misremembering something else - we haven't invented anything to replace fractional reserve banking, our economy wouldn't work without it.
- ta999999171 7y ago
  Citation needed.

Yes, except fractional reserve banking hasn’t been the basis of banking since at least the mid 1930s.

by qubex 7y ago

Yes, except fractional reserve banking hasn’t been the basis of banking since at least the mid 1930s.

fennecfoxen 7y ago

Voted down as Fundamentally Incorrect. You must have misread something somewhere.

qubex 7y ago
No, I haven’t misread... even the Bank of England subscribes to the endogenous theory of money nowadays: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... Furthermore, Islamic banking has never relied upon fractional reserve banking. So... no, not “factually incorrect”.
- fennecfoxen 7y ago
  Okay, so you have located and subscribe to a heterodox economic theory. That's fine, and your theory may be legit. The theory that the New Deal substantially extended the Great Depression is ever-so-mildly heterodox, and I happen to believe it. I can sympathize. However, you are tendentiously representing heterodox economic theory as if it is mainstream; this is somewhat less than ideal, and impedes communication. And you go further, declaring that we abandoned fractional reserve finance in the 1930s. I am confident that even non-crank economists who subscribe to this theory will admit that the things that the original poster describes literally occur, to some reasonable level of approximation, and that the layout of money in a bank within US or European banking systems can therefore be meaningfully called "fractional reserve", even if endogenous-money theory is correct insofar as the underlying reserve multipliers are not a primary cause of changes in the total money supply (thus limiting the power of the central bank). Given that we are much less interested in the total money supply and central bank policy, and much more interested in the basic mechanics of banking and where money is and is owed, the topic you raise is incredibly irrelevant at best, and a sign of gross overreach. Finally, the US and European banking systems cannot be said to run on the principles of Islamic finance and your mention of Islamic banking here is 100% totally irrelevant. It is possible to advocate for this theory in discussions such as these. It may even improve understanding! This has not happened. Your posts do not promote understanding of economics or of banking, and you are not effectively advocating for this theory. I regretfully reiterate my conclusion that you are confused, and will note it is a further possibility that you are a crank.

vikramkr 7y ago

I think you might be misremembering something else - we haven't invented anything to replace fractional reserve banking, our economy wouldn't work without it.

ta999999171 7y ago
Citation needed.