The Declining Relevance of Fractional Reserve Banks

Here is a fascinating article on Wired about the declining influence and relevance of fractional reserve commercial banks on the lives of individuals. It argues that banks will one day look more like Google, Facebook, or Apple.

Interesting about this is that during hyperinflations when banks essentially collapse due to not having balance sheets built on sound and real assets, the major industrial companies begin to take on the role of commercial banking, extending loans off an asset base that rises along with prices.

For more on this and how banks evolve during hyperinflation, see Adam Fergusson’s book “When Money Dies”, and Constantino-Bresciani Turroni’s “The Economics of Inflation”.


About Chris Becker

Chris Becker is Market Strategist and Economist at ETM Analytics. Becker is Co-Founder of the Mises Institute South Africa. Visit his personal blog Follow him on twitter @chrislbecker.
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