Comment: Question #2.A - Fractional reserve and the gold standard

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Question #2.A - Fractional reserve and the gold standard

Yes, Fractional Reserve banking existed even before there was a USA. And the US was not always or only been on a gold standard before the Fed.

For most of its history the US used gold AND silver. Mostly silver. The original definition of the US dollar was a specific weight of silver (the Spanish doubloon or "pieces of eight") We have used silver, gold, government issue fiat money not based on debt, and private bank issued money backed by silver and/or gold.

Today we use private bank notes which are based on debt. Every dollar in circulation is either created by the Fed giving Federal reserve notes to the Government for a bond with an interest obligation, or the Fed loaning money to other banks, or a bank issuing a loan to business or a individual. Please research Money as Debt.

There is a lot of debate over whether we should use Gold, Silver, Gold and Silver, or a debt free government issued fiat currency in a return to a constitutional sound currency. I don't pretend to have the answer but here are some of my observations which may inspire some more posts:

Two times that Gold only standards were instituted resulted in currency contractions and concentrations of wealth to the bankers who held most of the physical gold.

The dollar is defined as silver, and gold was often used as a more concentrated "species" to reflect a ratio of value of silver to gold.

Gold is useful for international currency exchange, but silver makes for a more plentiful and flexible currency.

Non-debt fiat money? Well we had the continental and the greenback. The continental failed catastrophically because it was over issued. The green back fared better.