Thursday, June 7, 2012

A Simple Case for Full Reserve Banking

Principle No 5: As pointed out in a Financial Times front page lead story, commercial banks will use any old fraudulent or deceitful argument to prevent the above sort of restrictions on their activities. A common argument they cite is that restrictions on commercial bank activities impede economic growth, or will be deflationary.
The simple answer to that is that any government in combination with its central bank can provide stimulus whenever needed, and in whatever amount is needed to counteract any deflationary effect that comes from restricting commercial bank activities.
Read it at Ralphanomics
The principles on which banking should be based.
By Ralph Musgrave
(h/t Mike Norman Economics)

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