The Secular Saints by Hunter Lewis

Author:Hunter Lewis
Language: eng
Format: epub
ISBN: 978-1-60419-119-6
Publisher: Axios Press
Published: 2018-02-01T00:00:00+00:00

4. Paper money, whether issued by governments or banks, is injurious to an economy, because it leads to price inflation. The practice whereby banks are allowed to create the equivalent of paper money by lending money they do not possess (fractional reserve banking) should be abolished.

Institutions of banks, funds, and paper credit, with which we in the Kingdom are so much infatuated, . . . render paper equivalent to money, circulate it through the whole state, make it supply the place of gold and silver, raise proportionately the price of labor and commodities, and by that means . . . banish a great part of those precious metals. . . . What can be more shortsighted than our reasoning on this head . . . [since the production of this faux money just] raise[s] the price of every commodity.

It must be allowed that no bank would be more advantageous, than such alone as . . . never augmented the circulating coin. (“Of Money”)

Hume even pointed to the Bank of Amsterdam that was run on these 100% reserve lines. It kept custody of funds and lent money out as agent for the owner, but never lent money it did not possess, and therefore did not create new money as banks continue to do to this day.

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