Yes, there are two main schools of thought. Sorry, I didn't realize that saying was overused. The logic of spreading future tax dollars around in an effort to spur the economy never made sense to me because you are taking it out of the market to begin with. The most it could ever result in is a zero sum game.
Your theory on money is too narrow, and comes off as overly influenced by the Mises crowd (not actual Austrian economists).
Apparently 3 presidents tried to change the monetary system. Jefferson, Jackson, and Lincoln. The idea was that "congress would issue its own money and banks would be required to loan on existing assets rather than use fictitious money based on merely a fraction of their assets." So my understanding is that when you eliminate "fractional banking" you eliminate the boom bust cycle that we have now, and if you eliminate the bust cycles then there is no "need" for deficit spending...and rack up debt. Am I off base? I've obviously left out other factors for simplicity sake.
A widely believed myth. There has been fractional banking since before the birth of the country. The Federal Reserve didn't bring it. The business cycle predates fractional banking by thousands of years. The cycle is inevitable, and was just as bad or worse before the creation of the Federal Reserve. There were many depressions before and only one since. We attempt to minimize it, and, we'll call them the Ron Paul crowd, wrongly blames the cycle on government. Sure government can compound or reduce the sway, but it doesn't cause the cycle.
Truth be told, "sound money" still employs the fractional reserve mechanism anytime any loan is made, whether the loan is in gold, cattle, land, or anything else. Think about this: you loan your neighbor a gold coin, she invests it in a new parlor dress for her prostitutin' bidniss, the taylor then loans it to a drunk. Two loans are outstanding from one gold coin. It's all fractional, man.
Fractional banking creates and destroys money. If we didn't have this mechanism then the government would have to get money into circulation another way. Saying "sound money" sounds nice, but it's a baseless concept with not much thought behind it. Our money is a medium of exchange. The value comes from the economic powerhouse that backs it. It's given further validity through taxing power. I'll take this system over gold any day. All gold does is get thrown in a vault and worshiped, where it does nothing to better humanity. Money is used for the benefit of all. Gold is an idol, and I'd be happier if all the world's reserves were dumped into Eyjafjallajokull.
