mister_monster on Nostr: Well boom busts are impossible to avoid, because you can't stop people from lending ...

Well boom busts are impossible to avoid, because you can't stop people from lending to each other. But Keynesians think that by creating money during the bust they can smooth it out, which works but it causes even worse problems that accumulate as we can all see.

Fractional reserve lending exacerbates it a lot, because *everyone's* money is being lent out, whereas without it it would just be people that want to lend creating the cycle, you have to have capital earmarked for lending normally but when everyone's money is controlled by a bank that lends it out now you have all liquid capital contributing to the problem.