Oh... Where did I find that...?

There's an Austrian Economist being feted on his retirement who wrote a piece defending fractional reserve (free) banking. Some of my readers may be interested.

Ah, here's the article with a direct link to the pdf. Pretty easy to find today. It's the top article on their home page. The link is in the middle of the third paragraph.

In a perfectly free banking system, everyone must be free to offer any type of notes and to charge customers for his services in any way he can imagine. And any customer must be free to choose the kind of notes and the system of payment for services he prefers. One possible way for the issuers of money substitutes to make people pay for the cost of holding gold is nothing else than a fractional-reserve system. In fact, in such a system, the return obtained by the issuer of money substitutes is proportional to the length of time during which people hold notes, since he receives interest on a fraction of the value of these notes, namely those which have credits and not gold as counterparts in his balance sheet. In a perfectly free banking system, different kinds of issuers, with different methods for charging customers, may (at least potentially) coexist on the market. But, we cannot decide from outside that a 100-percent-reserve system is optimal, since optimality cannot be defined independent of the wants of individual (sic).

I suspect, myself, that The People would select fractional reserve banking, given the opportunity.