Fractional Reserve Banking as Economic Parasitism A Scientific, Mathematical, & Historical Expos´ e, Critique, and Manifesto - -By Vladimir Z. Nuri

This paper looks at the history of money and its mod
ern form from a scientific and mathematical point o
view. The approach here is to emphasize simplicity
A straightforward model and algebraic formula for a
large economy analogous to the ideal gas law of ther
modynamics is proposed. It may be something like a
new F = ma rule of the emerging econophysics field
Some implications of the equation are outlined, de
rived, and proved. The phenomena of counterfeiting
inflation and deflation are analyzed for interrelations
Analogies of the economy to an ecosystem or energy
system are advanced. The fundamental legitimacy
of “expansion of the money supply” in particular is
re-examined and challenged. From the hypotheses
a major (admittedly radical) conclusion is that the
modern international “fractional reserve banking sys
tem” is actually equivalent to legalized economic par-
asitism by private bankers. This is the case because
contrary to conventional wisdom, the proceeds of in
flation are not actually spendable by the state. Also
possible are forms of “economic warfare” based on
the principles. Alternative systems are proposed to
remediate this catastrophic flaw.
The dynamics of money is an extremely complicated
subject. It’s a foremost preoccupation of humans,as in the way money system mechanics is intricately
woven into major plotlines of complex and influential
popular fiction works such as Rand’s Atlas Shrugged
[52] or Stephenson’s Cryptonomicon [61]. Extrapo-
lated, it even becomes a “social energy system” theme
in more futuristic or outlandish forms such as emerg-
ing from the popular science fiction movie The Ma-
trix.
Possibly the full leverage of focused worldwide sci-
entific inquiry and attention has yet to be applied
to economics. Some evidence that the science is
still in its infancy are that new fields of “economic
physics” or “econophysics,” “computational finance,”
also dubbed “phynance,” have been proposed only
recently. [4, 19, 18] Physicists are applying statisti-
cal and computational modelling techniques to come
up with creative, ad hoc, or highly realistic theories
of money flow in e.g. large economies or stock mar-
kets. [20] Despite the overused clich´e, objective scien-
tific commentators sensitive to these kinds of shifts
and trends could easily identify all the signs of an
apparent Kuhnian “paradigm shift” [38] in progress.So the blaring headlines read, “Physicists try to
break economists’ monopoly on financial theory” [4]
and “Physicists attempt to scale the ivory towers of
finance.” [19]
One major factor in the shift is increased compu-
tational power due to the so-far-uninterrupted real-
ization of Moore’s law over about four decades at the
close of the 20th century, i.e. exponential growth (in
gates per chip or many other similar measurements).
This awesome and accessible power has elevated the
computer to the status of a new scientific instrument,
roughly analogous to the invention of the microscope or telescope, which has rapidly transformed conven
tional scientific perspectives on laws of both nature
and societies.