Quote from: Hawker on October 28, 2013, 09:20:05 AM

Quote from: Zangelbert Bingledack on October 28, 2013, 06:31:17 AM

Keep in mind that what allows fractional reserve is lack of competition (a company could profitably differentiate itself from competitors by maintaining transparency), and what causes lack of competition is government regulation. In a completely unregulated market, fractional reserve is a non-issue because there is no possibility of monopolistic privilege for any one company or cartel.

Fractional reserve banking exists in a competitive environment and has always done so. So that premise is faulty.

Where is your data? Banking is almost always one of the most regulated industries, so I'm not sure where you'll find such a competitive environment in history (medieval Iceland??), and Bitcoin makes transparency even easier so there is even less friction there.

Note that insofar as "fractional reserve" implies fraudulent banking, I'm saying it won't happen enough to be an issue, provided the market is unhampered by government. But simply having a loan clearinghouse where peopleunderstand they're loaning their money and risking not getting it back, is fine. I wouldn't call that fractional reserve because there's no claim being made that it is a "reserve" (bank). If you want to call that fractional reserve as well, then yes there will be some fractional reserve and it will create some inflation, but that's an odd name for it.