Of course I'm not against banks loaning and making a profit. What I am against is artificially increasing the money supply by the flick of a pen and their assurance that your "savings" are still yours while they have them loaned out to someone else.This video is somewhat concise on the basics of how fractional reserve banking does that.

It's dishonest not to explain to the customers that they're betting their savings against a run, which the FED just might decide not to bail out. In a full reserve system there would be clear distinction between depositing for safe-holding and investing for purposes of making interest. Investments for loan purposes would naturally continue to pay a rate of interest, but unless a loan agency decided to provide no cost safe-holding of money there would be a system of charge for that service.

Taken on it's own and emphasized it is just Silly. That fractional reserve banking alone doesn't create inflation.

I agree with Sunshine that banks should inform their customers their withdrawal might not be available on demand, due to bank lending. They should pay the depositor a good amount of interest to keep their money with that bank, for this inconvenience. The depositor is lending the bank money, so they can use it to build leverage and make a lot more money. Many people do not understand this very basic premise of modern banking, and they should be reminded of it when depositing their hard earned money. Although, that is a bit idealistic, and the less depositors know about what's happening to their money, the better it is for the banks profit margins.

Other banks could label themselves as CD banks (cash on demand), where they keep a large amount of reserves on hand to handle most withdrawals. Our current monetary system is not a conductive environment for honest banking, since banks will get bailed out by the Fed when they make too many risky loans with other people's money. There is little incentive to keep a large reserve of unlendable money, when the Fed will bail you out if you get a run. Why keep all that money locked away in a vault, when you can be making a lot more money with it, when you know you might get rewarded with a bailout?

This isn't always the case for smaller banks, since sometimes they ARE allowed to fail, and get merged into a bigger bank. Inflation comes directly from the expansion of the money supply to lend to, and bailout these banks and the excessive purchasing of government spending bonds. The resulting inflation and the accompanying wage increases (which never come soon enough) to compensate, slowly rob the lower and middle classes of their wealth. Eventually the process will ensnare everyone in high levels of debt and interest payments, and will result in a currency crisis when the unit becomes astronomically inflated and other nations refuse to accept our debt payments in dollars.

That explanation is simplistic because there are many other factors. It is this econ 101 stuff that freshmen get all upset about "the man" and how we are going to be enslaved by some dark force.

It really depends on how you look at the problem. Some view the system as an imperfect creation that overall has benefited the nation greatly except up till recently. It's just some bankers looking to get rich, while improving the lives of those they loan to. There is no "dark force" conspiring against us, and anyone who believes in any conspiracy, not matter how valid or well researched and documented, is obviously a lunatic. The real problem is that college freshmen in econ 101 don't yet have enough historic or technical knowledge to name or sufficiently explain the underpinnings of this "dark force", and that is their main fault.

This force is real, and its current implementation is forming a high-tech feudalistic form of world government, controlled by an international financial elite. There is much evidence both historic and current that suggests that this is the case, and our nation is currently being merged into this system.