Even now , with the world falling around us, it is absolutely impossible to get anyone over the age of 25 to think about the financial system beyond the received zeitgeist for more than a moment.
My PHd brother in law and my investment banker cousin included.
My brother in law said that fractional reserve banking is no worse than planes overbooking.
So talking about the fractional reserve system islike talking about Chairman Mao, you aint gonna make it with anyone anyhow.
So how about this analogy.
The problem boils down to this. The problem is that most of the money that is borrowed and lent is somebody else's money, but there is no somebody anywhere for most of it. When you make a deposit, the bank says it is ;your money and you can get it back whenever you want. At the same time the bank says it'smoney and it can do with it whatever it wants. Well whose money is it anyway. Then on top of that the bank more than double books your reservation for your money. It would be like an airline booked ten times more seats than it has, and people made reservations everyday just in case they wnated to go some place. Most days only ten percent of the folks show up and everybody is happy. But some days everybody shows up to get out of town. And the bank is hoping that the government shows with an extra ten planes,. If everyone in every city wanted to get out of town, the government wouldn't have enough planes.
Then the world would be flooded with planes, like in the Weimer airport. Otherwise folks are left in the airport, cold and hungry.
Everybody borrowing and lending somebody elses money is that the financial system becomes just like a national forest. Nobody owns the forest. The forest is managed by the forest service. The forest service is managed by Congress. And Congress has it's idealogy and it's needs. Sometimes the forest is diverted to the wood pulp companies. Sometimes it is saved for the critters. sometimes it is overmanaged, sometimes undermanaged. Most forest rangers are well meaning, but they get lax and miss when somebody lights a campfire in a drought, or all the other problems. When somebody owns the forest, they take care of it. Wether it's the nature conservancy or Weyehauser. In the National Forest , a logger has no reason to take care of the land. A private owner does.