There's no more reason to ban the practice of fractional reserve banking because it can go wrong any more than there is reason to ban ownership of guns because they can be used to murder innocent people. The problem is, like always, a LACK OF COMPETITION. So no, SOCIALISM with it's never ending amount of state borrowing is what got us into this mess. Government intervention in the housing market is what got us into this mess. Government monopolization of the banking industry is what got us into this mess.
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Rather than questioning it, you're just trying to twist history and reality to fit your presupposed idea that there's something inherently wrong with fractional reserve banking, which is why, as iamnotback said, you are simply "conflating orthogonal issues".
The banks are allowed to create multiple simultaneous claims which cannot be simultaneously honored to the benefit of themselves and favored insiders. The value of all of the other money in the economy drops when ever this is done.
Literally babbies first argument against fractional reserve banking. The money-multiplier theory has been debunked time and time again. AGAIN, it's simply called LEVERAGE. You're trapped in circular logic.
The prime beneficiaries are both the bank who collect interest...
Conveniently you leave out the part where the bank splits the earned interest with depositors.
Also FRB != central banking & interest rate manipulation. You guys keep trying to tie those two things together when they are completely separate ideas.
This is a thread on Armstrong's work isn't it? One of the most critical aspects of his entire thesis is that you people who rip on FRB and can't see the inherent flaws of commodity-backed currencies (and how unnecessary they are in the first place), are just as lost as anyone.
Austrian theory is NOT INFALLIBLE, and that's saying a lot because I have immense respect for their school of thought. There are PLENTY of others who share that same respect and yet agree when these critical flaws are pointed out in classical Austrian theory.