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|User Info||Rebuttal To Mish: FRL; entered at 2009-05-07 20:14:33|
Registered: 2008-01-20 Metro Detroit
Banking obeys thermodynamics. You can't create something from nothing. Fractionaly lending money out increases the fungible money supply and creates disturbances in asset prices (pushing upwards during expansion and downwards during contraction).|
That is to say productive capacity is the same whether you're Fractional or 50%. The difference is pulling forward future productive capacity with fractional reserve lending.
Loan rates will be higher in a 50% system but, obeying thermodynamic law, the difference is made up with a lower inflation rate. Productive capacity is conserved in the system.