why are you conflating fractional reserve banking with unlimited money? it's not, but it is injecting liquidity into the market by allowing banks to give out more money than they have. if people repay their debts, the bank has both created currency and made a profit on money that never existed. in other words, the federal reserve permits banks to create money outside of the treasury and take profits on it. the problem is this causes inflation, and makes everyone's money slowly worth less over time. for your 3 banks: > banks buy bonds at 0% reserve rates > lol literally free money! > rates go up > now forced to either liquidate immature bonds or eat loss since roi is less than rate > banks now insolvent those three banks deserved to fail but guess what, the fdic and government have dictated that there are several national banks that are too big to fail, so when they are forced to reconcile the passive robbery with the fact that real growth has stagnated for 20 years and the market drops 50%, you and all otehr tax payers will foot the bill of keeping them solvent.
United States