[geysersam]

I don't believe the claim that non-fractional reserve banking would actually slow economic growth.

Is real economic growth even determined by anything but technological development?

Of course, the economy can be made to "grow" by some slight of hand, like having a high inflation rate while pretending that we don't. Or by depleting natural resources. But that's not the kind of growth we want.

[michaelt]

Some loans go to businesses so they can buy a new widget-making machine, employ more operators, and profitably sell widgets. Economic growth in action!

Other loans go to people who were going to buy a doodad after saving up for 12 months, who instead get the doodad immediately and pay for it for 14 months. That looks like economic growth, because in month 1 doodad sales have risen. But if the sale would have happened anyway, the 'growth' is lot more debatable IMHO.

[geysersam]

So if no one got those loans, what would have happened to the resources they bought? What would've happened to the resources that went into building the widget making machine? What would have happened to the operator employees? Would they've disappeared? Most likely they would've become available to another investor who did not get the loan but also wanted to build a widget making machine.

Did the loan actually increase economic growth? I think the only reasonable answer is: Yes, if the bank issuing the loan had a better idea than the market about the future profitability of the investment. However, that doesn't seem very likely to me.

[imtringued]

>Is real economic growth even determined by anything but technological development?

That is just the end result, the question is how do you get there? How do you organize an economy to reach that outcome in the most optimal way?

[geysersam]

Okay, I agree, that's the question. So how does fractional reserve banking contribute to that organization?