exactly
any bank which loans out causes inflation because it loans what it does not own. Thus there are 2 notes representing the same comodity
1st - bank ows saves
2nd - debtor ows bank
fundamently all banks cause inflation. This wont change even in gold standard.
How won’t it change under a gold standard?
A true gold standard would mandate full reserve banking. Full reserve banking would mandate that some need to save so that others can borrow. Since some save, thereby refraining from consumption, there is no inflationary effect from lending, since the borrowers are simply spending what the creditors didn’t spend.
because the ownership of the goods is claimed by two parties (depositor and bank acting as loan giver). in fully backed reserve system depositors would have a bank statement instead of notes representing money craeted out of thin air whereas the notes (backed by gold) would stay with debtor.
pls correct me if wrong
Is that not tautology?
They could still spend the credit.
Yeah. If X doesn’t exist, it doesn’t exist. If there are no savings there can be no credit. You might want to disparage that as a ‘tautology’ but it looks as if some people can’t understand the ‘tautology’ well enough.
Looks as if you are having problems with definitions and tautologies…or consistency.
Hmm, I’d venture to guess that the usage of credit cards would be considerably lower under fractional reserve banking, as well…either that, or interest rates would be particularly high.
Not that I have a problem with that.
The interest rate would then totaly depend upon savings. Yes Credit cards would be used less, but remember, under a gold standard, its the purchasing power that makes all the difference. So, under a gold standard, and 100% reserve banking, we would swipe less, and at the same time being able to purchace the same, if not more.