User:Ekonomics geek

Necessity of Fractional Reserve Banking for Loans
The authors criticize and propose abolishing the fractional reserve banking, neglecting the fact that abolishing it would severely reduce the ability of the banks to loan money.

Federal Reserve Dividends
While the Federal Reserve dividends are fixed at 6 percent, by law, the Federal Reserve member banks are required to return the dividend payments exceeding their operating costs. The film completely overlooks this fact.

Proposed Debt Solution
At the end of the film, the proposed solution to the US national debt is two-fold: Firstly, print more money to pay off the debt. And at the same time, to compensate for the increase in the money supply and inflation, gradually abolish fractional reserve banking by raising the reserve requirements.

However, making the banks increase their reserves would require them to reduce the amount of loans they make available for businesses. This development would be likely to cause a depression in the economy.

Predicted Major Depression
While the film came out in 1996, predicting an imminent major depression, this depression has not happened.