There is, as we know, a varied group of people who think that fractional reserve banking is for the very Devil.
It\’s a minority view, to be sure, but they do seem to be very intense about it. Various people screaming about how the banks get the profits from hte creation of credit for example, how we should nationalise this so as to benefit as the wider society.
All has been dealt with hundreds of years ago of course, Adam Smith devotes many of his interminable pages (yes, it\’s a very good book, WoN, but not exactly an easy read to the modern eye) to pointing out why fractional reserve banking is such a good idea.
Still, for this freakish sub sect there is good news.
So, for these folks: good news! We don\’t have fractional reserve banking anymore.
In statistics-speak, since last November, the monetary base has exceeded M1, which means, more or less, that bank reserves (plus surplus vault cash) exceed liquid deposits.
And now that we don\’t have fractional reserve banking everything is just fine, isn\’t it?