Actually I'm asking because of two reasons. I'm still not clear how everything works. First money is supposedly a debt, and it is created by creating loans? Second central banks seem to want countries to take on huge loans. Based on these two points (assuming they are true) If they stopped providing loans or had no one left to provide huge loans to - what would happen to certain aspects of the economy like inflation, employment, etc. What would happen to the banks?

  • $\begingroup$ I find that the title is out of sync with the question. Perhaps the last "to" in the title is superfluous? $\endgroup$ – Giskard Jul 10 '15 at 9:55
  • $\begingroup$ @denesp How is it now? I tried to clarify what I mean a bit more. $\endgroup$ – erotavlas Jul 10 '15 at 12:21
  • $\begingroup$ Its much better, thanks. However this question has already been answered: economics.stackexchange.com/questions/444/… $\endgroup$ – Giskard Jul 10 '15 at 13:42
  • $\begingroup$ @denesp ok I see, however I'm not proposing eliminating fractional reserve banking, just curtailing their ability to provide new loans and growing the money supply. I'm just thinking there must be a reason why the central banks want to keep growing and give away huge loans to countries. $\endgroup$ – erotavlas Jul 10 '15 at 14:26
  • $\begingroup$ eliminating FRB will curtail those abilities. If you only limit FRB the effects will be the same, only their extent should be smaller. Please read the answer given to the referred question, it is a good one. $\endgroup$ – Giskard Jul 10 '15 at 16:05