The Myth About Fractional Reserve Banking

CNN's John Sutter talks about how banks create money. He says the idea of fractional reserve banking is a myth, but maybe not fully a myth. When we look at modern day banking, he says, government issues currency in order to extract goods and services from the economy. And so once you understand that, as we start of the sequence for collecting taxes, it sets the tax obligation which decides what kind of thing people are willing to pay.