Some economists of the Austrian school oppose fractional-reserve banking on the grounds that it is inherently fraudulent, pro-cyclical and unstable. These critics should focus their wrath on repressive financial legislation and central-bank mischief, not on a legitimate practice that encourages savings and investment.
|Other Independent Review articles by George A. Selgin|
|Fall 2013||The Financial Crisis and the Free Market Solution|
|Summer 2011||They Stumble Who Run Fast|
|Spring 2010||Central Banks as Sources of Financial Instability|