If the fractional reserve loaning leads to correspondingly higher economic production, within reason, that does not raise prices. The problem is preventing it from expanding to the point where too much is being produced, beyond the ability to consume or use it.
***If the fractional reserve loaning leads to correspondingly higher economic production, within reason, that does not raise prices.***
But prices are higher than they otherwise would have been. I’m not better off because of that. And prices always go up which leads me to believe the volume of goods never keeps up with the increase in the supply of money.
***The problem is preventing it from expanding to the point where too much is being produced, beyond the ability to consume or use it.***
Sounds like central planning to me. No one can know when “too much” is being produced. In fact money creation distorts economic calculation. It gives more to people wanting to invest in higher order goods without a corresponding shift in consumer preferences. The investment in the higher order goods is only sustained by cheap credit. It isn’t based on real market demand and thus the boom period proves to be a period of malinvestment, in other words, resources were employed poorly.