Staying with this subject, about thirty years ago I spent an afternoon chatting with the man who started the Pitlochry Knitwear Company. He had initially used a very conservative bank that wouldn’t lend; they saw their role more as that of deposit takers. So he moved to a different bank, much to the stunned irritation of the first, borrowed and built a nation-wide chain of shops, creating hundreds of jobs.
The present economic downturn has shown, if it were needed, the dire consequences of a contraction of bank lending.
Do people who argue against fractional reserve banking really want to return to a past in which capital rested with those who inherit it, and no entrepreneurs can get funds to expand their businesses?
I suspect the answer is yes, in many cases.
Maybe we just do things differently in America, but I think that answer is “no” in virtually all cases, at least over here. They want to eliminate some perceived risks and perceived problems, and they haven’t thought at all about the opportunity cost of doing so.
True, it’s reductive bullshit, but who among us is utterly immune to reductive bullshit?
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