Fractional Reserve Banking Problem

A city decides that it wants to build a bridge. So it hires a private firm to construct a bridge. When contructing the bridge, the architect makes sure that the bridge can support 80% of the population at any given time.  If that is the case, does every citizen have a claim to the property they bought at any given time? Of course not. It is fradulent because even though every citizen paid for the bridge, the property which they paid for cannot be used by everyone who paid for it at a certain time.

Meet “Fractional-Reserve Banking”. Now just imagine if the bridge was only built to support 10% of the population at any certain time (Reserve Requirements=10%).

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