What do Austrians think of fractional reserve banking?Submitted by Ludwig M. on Sun, 04/21/2013 - 11:38
As I understand it, FRB means that a bank lends out most of it's deposits (gaining interest on this) and doesn't keep enough money to satisfy ALL depositors, should they all at once ask for their money back from the bank.
Should it be illegal? Or just that, if "too many" depositors ask for their money back, the bank should be "allowed to fail."
Is there a view on this that is held by all Austrian economists?
What do you DP'ers think about it?