Fractional reserve lending versus.... what?

[Domalais]

Just because that is how they do it now doesn't mean that is how they have to do it. If the money was not available to the customer while in the CD then no new money would be created out of thin air and no business cycle would result.

Business cycles existed before modern banking.

[The Gold Standard]

Business cycles existed before modern banking.

Not before fractional reserve banking and/or currency debasement.

[GeorgiaAvenger]

One question I get is how are large projects going to be funded without large banks?

[The Free Hornet]

you notice how you keep asking the wrong question? Why do you assume we NEED loans and credit?
What happens, if starting tomorrow, we had no car loans, home loans, credit cards?
Don't you think one or few of these things will happen?
Demand for goods drop, costs and profits drop, production drops, waste drops. It'll hurt lots of people who want to profit off loans, houses, cars and credit cards, but is that a bad thing? Isn't a good society one which less people are employed to finance loaning, and more people are employed to either produce good or reduce wasteful products?

Demand might drop temporarily if the Fed was unable to loan out more money. However, private companies and private capital would quickly flow in to create new financing opportunities. It might be less glitzy, better background checks, higher downpayment, higher APRs (most likely). More people would be turned away for having bad or no credit or bad finances or no down payment.

Why we "NEED loans and credit" is of zero relevance. In Economics 101, needs and wants are unlimited. Whether essentials or luxuries, their nature is the same: un-effing-limited. It is resources that are limited and the free market, not the Fed, is supposed to be the allocator (e.g., determine the cost of money).

[newbitech]

consumer loans need to go.

[gerryb]

One question I get is how are large projects going to be funded without large banks?

Sandbox vs. Beach.

How do you get a beach without beach sized sandboxes?

I can't think of a single project the local community can't do.

[gerryb]

If I need $200, I borrow from a friend? If I need $20,000, I borrow from a rich friend?

In a Ron Paul world, what would a system of 'sound money' be like?

The person who holds an asset(like a house) and is trying to sell it would create a note, and hold it. The purchaser would make payments. There's no reason to get a banker involved.

[Steven Douglas]

One question I get is how are large projects going to be funded without large banks?

The time-honored old fashioned way: only with money that actually exists, the usage of which banks acquire from others, and pay to use, with no competing malinvestments in the mix.

[thoughtomator]

The radical idea is the legalized counterfeiting of the fractional reserve system.

A person should not be allowed to lend that which he does not have - that's called fraud. Being a banker is no excuse!

[Zippyjuan]

Not before fractional reserve banking and/or currency debasement.

Busniess cycles have existed under all economic and monetary systems throughout history.