Monopoly money
Legal tender law
Lack of convertibility
Inadequate backing of money
Deposit insurance
Moral hazard
Central banking
Regulation that prevents entry
Regulation that prevents innovation
Congressional incentives for loans to unworthy borrowers
Market discipline replaced by government regulation
Results: An insolvent banking system, depreciating dollar, bank crises, and recessions.
Fractional-reserve is an inherent part of it, but not the central villain. With monetary freedom and free banking, there can be fractional reserving but the market will control it.
12:04 pm on October 4, 2008
