17 December, 2010
I recently wrote a couple of notes on Facebook on the subject of “fractional reserve banking”, which I have now reproduced on my web site. (My notes are themselves rather “fractional”, since I don’t cover every aspect; but they have been covered by other economists, such as Mises, Rothbard and Reisman.)
And the same subject is currently discussed at some length by Doug Reich (The Rational Capitalist); I heartily recommend that you read him as well.
PS 23 December 2010: There is also a good piece on the subject by Thorsten Polleit on the Mises Institute’s web site: The Faults of Fractional-Reserve Banking.