Mixing functions creates fractional reserves

Why is a lecture on banking scheduled for the very first day of Mises University? Because, Jonathan Newman argues, banking is where money gets strange. Following Rothbard's Mystery of Banking, he separates the two things a bank can do—safekeeping your deposits and lending out savings—and shows that neither one expands the money supply. The trouble begins when a bank promises your deposit is available on demand while quietly lending most of it away. Recorded at the Mises Institute in Auburn, Alabama, on July 20, 2025. Mises University is the world’s leading instructional program in the Austrian School of economics, and is the essential training ground for economists who are looking beyond the mainstream.