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0 pointswildmusings8y ago0 comments

You can certainly have fractional reserve banking in a Bitcoin financial system, just as we did under the gold standard. Banks would give you an incentive to deposit BTC with them (could be interest rates or lower transactions fees) and then lend out some percent of those deposits. Voila, FRB and money supply growth.

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t3soro8y ago

The bank would have no capital to lend at fractional reserve. It could not lend out 90% deposit value without getting run on, because there is no deposit insurance. There is no M1 money supply growth coming from the central bank. You would be buying a bond but also necessarily acknowledging the possibility of default, unlike today in the funny money world of perpetual debt money.

wildmusingsOP8y ago

Fractional reserve banking predates deposit insurance by hundreds of years. All of what you say was also true about gold, which was of relatively static supply.

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0 pointswildmusings8y ago0 comments

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t3soro8y ago

wildmusingsOP8y ago

Fractional reserve banking predates deposit insurance by hundreds of years. All of what you say was also true about gold, which was of relatively static supply.

j / k navigate · click thread line to collapse