Saturday, 3 May 2014
Fractional Reservers contradict each other.
The great thing about the supporters of the existing banking system (fractional reserve) is that they opine on the subject of the full versus fractional reserve argument without having the faintest idea as to what full reserve actually consists of.
For example, Jeremy Warner in the Telegraph claims full reserve leads to excessive spending. Apparently it would mean that “politicians can print money to their hearts’ content to wipe out public debt, pay for healthcare, fund infrastructure…”.
But Ann Pettifor claims the opposite. She claims (to quote) that full reserve would lead to “contracting economic activity” and to “unemployment” and would cause “economic activity to wane”.
Of course I can’t claim that full reservers sing from exactly the same hymn sheet.