Forty Defective Criticisms of Full Reserve Banking

Abstract

Abstract. The basics of full reserve banking (FR) are set out below, followed by forty defective criticisms of FR. Each of those forty sections has: 1. A heading. 2. Where the heading does not adequately capture the nature of the criticism, there is a paragraph below the heading starting “I.e…”, which expands on the heading. 3. There are references to one or more economists who have put the relevant criticism. 4. The answer to each criticism which starts with a paragraph beginning with the word “Answer.” And finally, this work is an updated version of Musgrave (2014). About 90% of the content of this and the latter work are the same. Abbreviations used are thus. CB refers to “Central bank” and PB refers to private bank. The term “commercial bank” would be more accurate than private bank since a commercial bank can perfectly well be publically owned. But the words central and commercial unfortunately both begin with “c”. Thus the term “private bank” is arguably better. The word bank on its own refers to a PB. Keywords. Full reserve banking, Fractional reserve banking. JEL. E58, G01, G21.