Should banks be allowed to create money?

[Simfan34]

We are talking about money multipliers, yes?  Then of course they should, basic economics

[Simfan34]

If you vote no, this means you want to abolish loans entirely and thus intrest if not banking entirely.

Because that's how banks create money. You put money in the bank, they loan it, they put in the bank, that bank loans it, and so forth until you've hit the limit set forth by the reserve ratio so loans are not economical. If there were no reservations, thus, this could go in indefinitely.

[Simfan34]

No, fractional reserve banking using demand deposits creates multiple claims to the same good, which is a legal fiction. Instead, banks should only make loans using money from time deposits to eliminate the Schrödingerian logic needed to justify fractional reserve without causing economic stagnation.

But in doing so you would dramatically reduce the amount of deposits one could draw from.

[Simfan34]

Your point is?

[Simfan34]

Your point is?

He is incorrect in denying fractional reserve loans constitute money creation; even a introductory macroeconomics teacher could tell you that.

But he's saying the exact opposite. No new physical money is coming into being, but it is being created.