> It baffles my mind how fractional reserve banking is even legal. Why? You couldn't let out loans as a bank at all if you had to maintain 100% reserves. Plus

> It baffles my mind how fractional reserve banking is even legal. Why? You couldn't let out loans as a bank at all if you had to maintain 100% reserves. Plus how would you possibly enforce that? I can't lend my brother $100 with the promise to pay it back now? Nor do they "make up" money. They have the money when they lend it out, it comes from the "fractional reserve" that they are required to have, or cash assets above and beyond that. Likewise I could personally loan out money up to the amount of money I have, even with fractional banking, but I couldn't loan out money up to my entire net worth, as it's not all liquid.