Uploaded August 2026 | Updated September 2026, 2 weeks ago

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Bob returns to the fractional reserve banking debate to clarify a point the critics keep missing: in the Mises-Hayek-Rothbard framework, it's fractional reserve banking itself that sets the boom-bust cycle in motion, not merely central banks.

Celebrate Murray Rothbard’s 100th birthday with a free copy of The Case for a 100 Percent Gold Dollar during our August giveaway. Get yours at mises.org/HAPodFree

Related:
• Lawrence White, Free Banking in Britain: Mises.org/HAP561a
• Bob's Previous Episode on Rothbard vs Free Bankers: Mises.org/HAP561b
• Bob's Paper on the History of Fractional Reserve Free Banking: Mises.org/HAP561c
• Roger Garrison's Presentations on Capital-Based Macroeconomics: Mises.org/HAP561d

0:13 Returning to fractional reserve banking
0:59 The free bankers' blind spot
5:33 The smoking gun quote
6:20 Fiduciary media and credit expansion
10:10 It's not about bank runs
13:58 The 100% reserve proposals
24:41 Why Mises blames the market
27:46 Cantillon effects and gold
38:23 Fractional reserves per se
42:12 The structure of production
46:00 Sustainable vs. unsustainable booms
49:50 Conclusion: capital consumption

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