While FRB could be legitimate in a free banking system where banks create their own notes, it is fraud in our current system with Federal Reserve Notes as the reserve currency.
If I deposit $100 in a bank, they can not legally go down to the bank’s basement and run $1000 of FRNs off of their printing press and lend them out. Adding $1000 digitally to an account is no different.
Time deposits (and insurance) are not fraudulent because the contract states that you are loaning your money to the bank and they can invest it as they see fit. It states when you will get your money back and on what terms with the understanding that there is an amount of risk that the bank will not be able to pay. In this case they have not created new money. There is only one owner of that money at a time.
In a free banking system, banks could issue their own notes on a fractional reserve basis as long as they were clear about it. Then people would have the option to accept or reject the bank notes based on the trustworthiness and solvency of the bank.
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