Quote:
Originally Posted by GizmoPlanet
How about adding fractional reserve banking to the mix? In Canada and the United States, banks are required to have only a fraction of what they lend out backed by actual deposits. This means banks can actually create money out of thin air simply by generating a ledger entry.
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I agree completely regarding the importance and impact of fractional reserve banking. However, I framed my "three forms of legalized fraud" instead of discussing fractional reserve banking because most people don't understand fractional reserve banking even when you explain it to them. When you do discuss it with people, their eyes tend to glaze over within a few minutes. It was that fact, combined with the confusion that occurs whenever you explain most financial concepts which led me to focus instead on my legalized fraud triad. After all, anyone can understand that fraud is wrong, and the forms of fraud I identify don't take a rocket scientist to understand or discuss them.
It's not surprising that the concepts regarding fractional reserve banking are so difficult to follow. After all, ethically and logically they don't make sense and are counter-intuitive. Lend out money that has already been loaned out previously? Count a liability as an asset in your bookkeeping? Understand the multiplier effect and why it tends to approach ten times the original loan value? Ask people to try to comprehend all that, and for most of them their brains will melt.
I do mention fractional reserve banking in the novel, as well as creating money out of thin air. The challenge was to do so without losing the attention of the average reader, and I think I succeeded. Even with what I wrote, my volunteer editors and my professional editor all found the concepts to be a bit daunting...but something they could handle. I'm certain that if I became more technical, I would have lost most readers.
The Money Suckers was and is intended as a popular novel, not a financial tome. Hopefully, it will be received that way.
Besides, "End Fractional Reserve Banking" doesn't have the same ring as "End Legalized Fraud".