Exploring Fractional Reserve Banking in Coinucopia

Steve and Phil have described the island of Coinucopia in previous editions of the podcast. It started as a place where only coins were legal tender, and the supply of coins didn’t increase. They explained how that created deflation and inhibited growth, so the government started adding more coins. Then they let banks issue loans.  Now, what happens when the island allows banks to issue electronic loans. Actually, life becomes much simpler. Much simpler than most conventional economists would have you believe. Listen in to understand how banking now works, not just in Coinucopia, but in the real world. 

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