Banking and its effects on the money supply and asset bubbles: Part 3

What does a fractional-reserve system of banking do to the money supply?

Dear Reader,

In Part 1 of this series we dissected what a bank does at its core.
In Part 2 we looked at how a fractional reserve banking system works.

Now we will discuss what a fractional reserve system does to the monetary supply - that is the total amount of money people have available to them to spend.

As you will recall, in this fractional-reserve ba…