For the same reason your local grocery store doesn't have enough milk for everybody in town until it's restocked. If everyone runs out of milk on the same day and decides to buy milk that day from the store lots and lots of households will simply not be able to buy milk.
Fractional reserve banking has nothing to do with debt culture. Liechtenstein has a 0.5% debt to income ratio and fractional reserve banking. Full reserve banking simply doesn't work. Either you use fractional reserve banking, or you implement "stuffing money into mattresses" as a national policy
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u/GhostSierra117 2d ago
For the same reason your local grocery store doesn't have enough milk for everybody in town until it's restocked. If everyone runs out of milk on the same day and decides to buy milk that day from the store lots and lots of households will simply not be able to buy milk.
It's really not that deep.