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    Huerta de Soto 3: Fractional reserve banking

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    GoldMoney

    by GoldMoney

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    Watch the whole 1 hour and 6 minute presentation at http://www.goldmoney.com/huerta-de-soto-presentation. In this third video, Jesús Huerta de Soto, Professor of Political Economy at Rey Juan Carlos University, Madrid, (http://www.urjc.es/) explains the problem with the practice of fractional reserve banking, and why it leads to credit expansion that ultimately results in “boom and bust” economic cycles. “Virtual money” that is created easily by banks in the process of credit expansion during the boom contracts just as easily during the bust, resulting in recession.