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<p>[QUOTE=&quot;InfleXion, post: 1248773, member: 29012&quot;]Maybe you were saying this, but just to be clear - my understanding of fractional reserve banking is that the entire amount of the loan is conjured into existence as opposed to just the interest. This happens both when the Fed borrows from the north wind, and when national banks borrow from the Fed for regular loans, which amounts to a much larger disparity. The difference is that the monetary supply has to be increased to account for interest (unless we are to place the burden on participants on the whole), but incresaing the monetary supply to account for the entire loan is not necessary for that aim. As far as I can tell it is done just because they don&#039;t want to fork over their own savings to make the loan, and why would they if they don&#039;t have to. There is no risk involved and I don&#039;t see how it can be perpetually sustainable.[/QUOTE]</p><p><br /></p>

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