Fractional Reserve Banking: Unimportant or Unrighteous?

French toast for breakfast!  Who doesn’t love the appetizing aroma and delicious flavor?   Of course we need a few ingredients before we can have our pile of steaming goodness in the shape of French toast.  Bread, eggs, and milk – later on, butter and syrup – all need to be available for our ideal breakfast, and in the right quantities.  When was the last time you were able to create ten slices of French toast out of one slice of bread?  For that matter, when was the last time you were able to use one of anything to produce ten of the same?  You may not have that kind of power but, surprisingly, there is someone just around the corner who does.  When a bank accepts a deposit and then loans it out, it actually creates additional money out of nothing!  This practice (which we will explain in more detail in the next paragraph) is called fractional reserve banking.  But creating money with a few clicks of a mouse is a power that does not come without strings attached.  It has economically undesirable consequences and even moral implications that need to be considered.  Sadly, these often go completely under the radar.

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