As with all forms of inflation, fractional-reserve banking (and credit money) backed by legal tender privileges brings about an illegitimate redistribution of income; and since it creates far more inflation than any other institutional set up, the quantitative impact can be very considerable. The market economy can be understood as a great organism that caters to the needs of consumers—as expressed in money payments. When the economy is flooded with legal-tender fractional reserve notes, the whole economic body of society begins to cater excessively for the needs of those who control the banking industry. The American economist Frank Fetter once observed that the unhampered market economy resembles a grass-roots democratic process. One penny, one market vote. From this point of view, the imposition of fractional-reserve notes through legal-tender laws creates market votes out of nothing. The bankers and their clients (usually the government in the first place) have many more votes than they would have had in a free society. ~ Jörg Guido Hülsmanns The Ethics of Money Production. mises.org/books/moneyproduction.pdf
Posted on: Sat, 17 Jan 2015 01:41:30 +0000
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