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Re: How I Learned to Stop Worrying About Fractional Reserve …

  • Fri, Jul 10, 2009 - 07:15pm

    #63
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: How I Learned to Stop Worrying About Fractional Reserve …

Patrick Brown wrote:
Otherwise, I think we agree any system that uses debt risks collapse.

 

Right, we’ve nailed this one down. If you lent out gold over and over again, you’ll need exponential growth to perpetuate also. Exponential growth cannot work by definition. All you do with the gold money is to limit the money expansion by market forces, actually the gold mining market. Thus, you would inevitably get short on gold, inevitably cut lending, cut liquidity, and force the economy into a gold market triggered downward spiral.