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Fractional Reserve Banking as Economic Parasitism: A Scientific, Mathematical & Historical Expose, Critique, and Manifesto

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Author Info
Vladimir Z. Nuri
Abstract

This paper looks at the history of money and its modern form from a scientific and mathematical point of view. The approach here is to emphasize simplicity. A straightforward model and algebraic formula for a large economy analogous to the ideal gas law of thermodynamics is proposed. It may be something like a new ``F=ma'' rule of the emerging econophysics field. Some implications of the equation are outlined, derived, and proved. The phenomena of counterfeiting, inflation and deflation are analyzed for interrelations. Analogies of the economy to an ecosystem or energy system are advanced. The fundamental legitimacy of ``expansion of the money supply'' in particular is re-examined and challenged. From the hypotheses a major (admittedly radical) conclusion is that the modern international ``fractional reserve banking system'' is actually equivalent to ``legalized economic parasitism by private bankers.'' This is the case because, contrary to conventional wisdom, the proceeds of inflation are not actually spendable by the state. Also possible are forms of ``economic warfare'' based on the principles. Alternative systems are proposed to remediate this catastrophic flaw.

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Paper provided by EconWPA in its series Macroeconomics with number 0203005.

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Date of creation: 15 Mar 2002
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Handle: RePEc:wpa:wuwpma:0203005

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Related research
Keywords: fractional reserve banking money expansion parasitism capitalism greenspan gold thermodynamics perfect gas econophysics gresham's law stiglitz money supply inflation deflation growth price stability counterfeiting energy radical polemic revolution economic warfare religion doublespeak gdp scarcity fiat blips federal reserve history slavery lassaiz-fair solow keynes keynesianism cancer psychology sociology politics analogy IMF world bank GNP GDP digital cash money laundering pareto mcfadden echelon nsa free market growth conspiracy

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B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
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C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General
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