Fractional Reserve Banking

System ID: SYS-FRB
Standard Syntax Verified
The Definition: The global standard for banking where banks are only required to hold a small fraction (e.g., 0-10%) of depositors' money in reserve. The rest is loaned out. This means most "money" in the economy is actually credit created by private banks, not government currency.

Your Money

Your bank account is not a digital vault; it is an unsecured loan you have made to a corporation. You are an unsecured creditor.

Your Life

Inflation is a feature, not a bug. The continuous creation of credit-money dilutes the value of your labor, forcing you to invest in risk assets just to maintain wealth.

The Mechanism

The Multiplier Effect: A single $100 deposit can create $1,000 in new money supply as it is loaned, deposited, and re-loaned repeatedly across the banking network.

Our World

The system requires infinite growth. Since all money enters the economy as debt with interest attached, the economy must grow fast enough to pay the interest, driving resource extraction.

The System Flaw

Confidence Dependency: The system is mathematically insolvent at any given moment. It only functions because we collectively agree not to withdraw our cash at the same time.