Friday, December 24, 2010

The Faults of Fractional-Reserve Banking

"... Austrians therefore argue for privatizing money production, shutting down central banks, and letting the market decide what kind of money people want to use. Government wouldn't have to play any active role in the workings of a free-market monetary system.

One may hold the view that precious metals — in particular gold and silver, and to some extent copper — would be the freely chosen, universally accepted means of exchange. In other words, they could become money once people have a free choice in monetary matters.

However, Austrian economists wouldn't call for establishing a gold standard, let alone a gold standard with (government-sponsored) central banking: they would argue for free-market money, under which, presumably, gold would become the freely chosen money"

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Eric Sharp
Regular Columnist, THL
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