> I have come to the conclusion that the problem with fractionally reserved money isn't the fractional reservation mechanism at all. Rather, the problem is that

> I have come to the conclusion that the problem with fractionally reserved money isn't the fractional reservation mechanism at all. Rather, the problem is that banks effectively promise the same money to multiple people at the same time. There is one "piece" of money, but multiple people have claims on it. Banks get overnight loans to cover the case where creditors want more money than they currently have access to. There is no single piece of money anywhere anymore. When you deposit a $100 federal reserve note in the bank you are only giving that bank a means to pay taxes or pay back loans from Federal Reserve Banks. If you take a $100 note to a federal reserve bank they will look at you funny. The reason this works is that U.S. currency is so stable that any potential commodity you might desire as currency can be paid for with USD money from virtually any bank in the world. Banks are just an accounting system at this point who barely hold any physical thing of value, and only on a just-in-time delivery model. The rest of the economy satisfies the market for transactions between money and goods. Why doesn't it all fall apart? The federal reserve raises interest rates when there is too much money in circulation, urging banks to pay off their liabilities, thus destroying money.