That doesn’t mean it’s a free market principle. All fractional reserve banking does is inflate the money supply, which produces no new goods. We aren’t richer simply because we print more money, or create more as debt. It redistributes purchasing power, just like any kind of inflation.
And what exactly are adequate reserves? Anything less than what depositors as a whole can demand at any given time seems less than adequate to me (i.e. 100% reserves). It is their money after all.
You really are showing a profound disregard for how the modern financial system works. Fractional reserve banking, when properly regulated, helps propel economic growth by increasing the velocity at which money moves around the system.