"Modern fractional reserve banking is a shell game, a Ponzi scheme, a fraud in which fake warehouse receipts are issued and circulate as equivalent to the cash supposedly represented by the receipts."
— Murray Rothbard, The Mystery of Banking, 1983
Rothbard's argument rests on a distinction older than central banking: the difference between a deposit and a loan. A grain warehouse that issues receipts for more grain than it holds is committing fraud, and no one disputes it.
Rothbard held that a bank doing precisely the same thing with money is doing precisely the same thing, whatever the statute books say about it. The Mystery of Banking walks the reader from that premise through the entire edifice of modern money, and it is short enough to finish over a few cups.
