Mixed Mental Arts

On April 24th, Martin Wolf of The Financial Times threw his support behind the proposed reforms of a UK-based group called Positive Money. In so doing, he was joining a growing number of financial experts who have identified fractional reserve banking as the reason why our economy experiences so much instability. As Wolf observed, it is illegal for private citizens to print their own money (it’s called counterfeiting) and yet it is entirely legal for banks to print money. Most people just don’t realize that they’re doing it. As Positive Money explains on their website "Currently only 3% of all the money in circulation is created by the Bank of England, the remaining 97% is created by commercial banks, when they make loans.” The numbers are comparable for the US or most of the world’s economies. Banks, unlike private citizens, have the right to create almost as much money as they want out of thin air. This monopoly (which other parts of the financial industry don’t get) is why banks become too big to fail. In