Iceland mulls the death of fractional reserve banking.

As crazy as it might have sounded years ago, I predicted that the coming collapse would result in the death of fiat currency and fractional reserve banking not because anyone wanted the scam ridden spiked economic punchbowl to be removed but simply because the frat boys had burned down the frat house in their drunken state.

While I admit it is just the lunatic fringe for now, Iceland is now thinking about ending the pump and dump, boom and bust cycles caused by a dishonest, game-able  money supply wherein banks can create credit from thin air and loan it out for interest.  When banks can lend out money that is not already on deposit (which is the essence of fractional reserve lending), it allows them to increase the money supply since credit which is conjured into existence spends the same as money from the monetary based controlled by the central banks.  This system encourages banks to loan out as much as they can as fast as they can and then, when the whole thing blows up like every pyramid scheme always will at some point, the whole mess is laid on the backs of the taxpayer to sort out.

If Iceland does this so called "radical" step then the world will begin to see how their economy settles down into a nice growth pattern which is predictable and without great cycles of variation. The bankers there will no longer have all the wealth; it will be redistributed to those who add real economic value (fractional reserve bankers do not add value, they are value drainers, they are complete parasites on the economy).  Once people see how economic growth not only does not depend on fractional reserve banking but is in fact inhibited by it in aggregate, the bankers will slowly see the tide change against them and fractional reserve banking will be done away with globally over time.  I also believe that fiat currency will eventually be discarded in favor of more honest money which is explicitly backed by gold and silver.

Note: banking is not bad.  FRACTIONAL RESERVE banking is, however, completely evil and corrupt, a total scam.  If anything is to be considered radical, it should be the concept that special people get to conjure money from thin air and then loan it out for interest.  Honest loans are not bad either.  But issuing loans must never cause an increase in the money supply if they want to be viewed as honest.  Before a bank can issue an honest loan it must first have the money on deposit, and such deposits must exist in some vehicle such as a certificate of deposit where the owner of the money cannot withdraw it on a whim.  Anything else is a scam, scam, scam and people are fools to allow it to occur.