Quote Originally Posted by HoreTore View Post
My criticism towards you and Fisherking is your use of fractional reserve banking as explanation of the cause of it. That's what's nonsense and where you go wrong.
He is correct somewhat in a sense that if banks had higher reserves, we wouldn't feel the depression so much as banks would have been able to cover bigger part of their losses from the reserves, but that is definitely not the reason we had depression.

The problem with higher bank reserves is that it makes the amount of money in circulation smaller, thus making investments more expensive. So, if we, for simplicity sake, say that because of the depression the 100$ we had became 90$ and if banks had higher reserves we would have lost less. That's true, but the economy wouldn't have developed as much so we would have had only 90$ in the first place and lost 2$, bringing our current wealth to 88$ - a net loss. A lot of it is psychology, a subjective feeling of loss

Bigger problem with the banks, especially in the US, is the risk factor, which is what really needs to be addressed.

On to the topic at hand - we've seen that the current model isn't the best. It needs to be tweaked. Taxation needs to be more fair, but naturally, it's much more complicated than it sounds.

I'd prefer if the state took a more active role in promoting social mobility, and adjust taxes (specifically for the wealthy) accordingly to that effect.