To what economic philosophy does fractional reserve lending belong?

Economics Economics Questions
1

Hello all,

I have recently been ‘illuminated’ in regards to fractional reserve banking, the Fed, etc. and have a couple of questions.

Which economic/political philosophy is used to justify the earning of interest and obtaining liens on real property by lending money that hasn’t been earned and saved through hard work and frugality? What gives them that right/ability? Can I start my own bank with a $100k investment and earn interest on $1M?

And also, (because of recent events) how is it possible for banks to not make an absolute ton of money by earning interest on money created out of thin air? Or asked another way, if the $100k I lend for a home only costs me $10k and the home now is even only worth $50k are not my real assets still 5x my initial investment?

2

Keynesianism, which argues that the market suffers from insufficiently high demand at certain periods. So injections of liquidity are necessary to “stimulate” markets.

-Jon

3

Fraud.