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Lets suppose the government outlaws fractional reserve banking, but keeps our current fiat currency system the same. Can a Full Reserve Banking System co-exist with a fiat monetary system? What would be likely consequences of such changes?
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[quote user="Okooka"]But isn't the problem with FRB as well? Banks give out multiplied ammount of credit based on deposits, so when a crisis hits and people start to default, the money supply contracts. Do I have anything wrong with seeing it like that? Admittedly I still don't quite...
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I am fully open to criticism of any part as I am not confident of all my assertions. but anyway: It wasn't until colonialism brought unprecedented expansion that bankers were able to get away with their fractional lending scheme. I think this is because commodity based currencies worked fine in slowly...