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    Fractional reserve lending versus.... what?

    I am very new to the Ron Paul/Liberty movement (about 4 months) - and was prior to that a self-confessed "head in the sand" kind of guy.

    I have learned soooo much in the past few months my brain hurts.

    But the whole sound money/evil banking thing still has me puzzled. From what I've learned so far, Central Banks + fractional reserve lending = Evil. Yes?

    I'm an artist and musician, and really bad at numbers and economic theory, so at best I'm just trying to get my head around the big picture.

    I find Wikipedia quite good for big picture overviews, and so based in the wiki article I've put together this little chart on how fractional reserve lending works:



    My question is: If we don't have fractional reserve lending, exactly how would banks make loans? And if it is possible to eliminate usury/interest on loans, then how would a bank make a profit and stay in business?
    Last edited by Jamesiv1; 02-26-2012 at 02:15 PM.
    1. Don't lie.
    2. Don't cheat.
    3. Don't steal.
    4. Don't kill.
    5. Don't commit adultery.
    6. Don't covet what your neighbor has, especially his wife.
    7. Honor your father and mother.
    8. Remember the Sabbath and keep it Holy.
    9. Don’t use your Higher Power's name in vain, or anyone else's.
    10. Do unto others as you would have them do to you.

    "For the love of money is the root of all evil..." -- I Timothy 6:10, KJV



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