Not exact matches
While most of his proposals — «to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort» — are now conventional practice, his critique of
fractional -
reserve banking still «remains outside the bounds of conventional wisdom» although a recent paper by the IMF reinvigorated his proposals.
But
while daydreaming about these, we shouldn't forget to be in awe of the invention of
fractional -
reserve banking.
Critics will say that the nation had recurring booms and busts
while on the classical gold standard, but they may be confusing the chaos of
fractional reserve banking (being able to pyramid loans on top of deposits with fiduciary media) with the classical gold standard (the citizenry is able to convert currency into a fixed amount of gold).
Fractional reserve banking is the practice of keeping only a fraction of a bank's demand deposits on
reserve,
while lending out the rest.