[narrator]

Fractional reserving is taken as something that is good and wonderful, but before you had the fed who could print money at will, you had banking crashes caused by it on a regular basis.

In a fixed money supply currency, fractional reserve banking should be illegal and banks should instead make money off fees. Venture capital should put their own money at risk to invest in the economy. How will people afford houses though? The housing market booms and busts because of the wildly fluctuating availability of credit caused by the money multiplier rapidly creating and destroying money which is tied to the fractional reserve banking concept. Homes would be drastically cheaper and people would actually be able to save to buy them if it weren't for the huge supply of rapidly created and later contracting credit available to buy them. Things we buy with credit like housing and education have gone up steadily in price, while things bought with cash have not.

The fractional reserve people are so sick of crypto, that ,in one platform, you can buy bitcoin but you can't send it to a crypto address. You have to get your friend on the platform, you can send it to them, and then they can convert it back into fiat. It's ridiculous, you're basically just buying and selling a security that tracks Bitcoin and not Bitcoin itself.

[anon84873628]

I can't really follow the comment. You seem to start a thesis about

>In a fixed money supply currency, fractional reserve banking should be illegal and banks should instead make money off fees

Which, ok... But then jump to

>The housing market booms and busts because of the wildly fluctuating availability of credit caused by the money multiplier

Which seems to be a thesis about our current world. I can't figure out the connection between them. Are you saying this is evidence of why the first thesis is correct? But USD is not a "fixed money supply currency", which was how we started out.

I understand that easy credit induces demand for housing which has inelastic supply and somewhat sticky prices. This doesn't seem to be a problem of Fractional Reserve banking though. The VCs in your proposed system will still invest in mortgages as a fairly safe bet, because people are highly motivated to have a place to live.

And mortgages are an important tool so people have a place to live _before_ saving for 30 years. Given our current population dynamics and everything else...