Fractional Reserve Banking Is Fraudulent and Ruinous

Fractional reserve banking is a banking system where commercial banks are required to maintain only a fraction of deposits as cash reserves for withdrawal while also having the ability to create money through lending. This has been a topic of heated debate in economics. Both camps have presented arguments that have not conclusively disproved the opposing viewpoint, resulting in a decades-long stalemate on this complex and contentious subject. This article demonstrates that fractional reserve banking is fraudulent and ruinous, asserting that it is fraudulent when banks use funds from non-interest-bearing accounts to issue loans or make investments, as this practice constitutes an infringement of property ownership rights. It is further fraudulent when commercial banks create money by lending it into existence. Additionally, fractional reserve banking is ruinous because it leads to crises and other detrimental consequences. The article is structured in four parts: the first discusses ethics, fraud, and human nature; the second outlines the definition of fractional reserve banking; the third explains the doubly fraudulent nature of this model; and the fourth examines its ruinous consequences.