Quarterly Journal of Austrian Economics

Volume 8, No. 2 (Summer 2005)

Selgin and White commence their defense of monetary systems with fractional-reserve banking, provided they are based on gold specie money. They argue that such systems are both ethically and economically defensible. With respect to the economics of the matter, they address several issues. We consider them in the following order: instability; resource costs savings;feasibility; and, mismatching of maturities. We conclude with a discussion of the possible conflation of time and demand deposits. If Selgin and White are correct that fiduciary media could exist in an otherwise free market, we would have truly reached the promised land.