Many claim the problem with fractional reserve banking is that it loans money into existence.
It does, but under normal circumstances the money created by commercial banks disappears when loans are repaid or defaulted on, which therefore doesn't create a permanent inflation of the money supply.
Government intervention converts temporary money into permanent money through bailouts like the Troubled Asset Relief Program.
Bailouts turn such disappearing credit into permanent money, in effect giving banks free money.
Without government bailouts, banks would be unwilling to make loans that are unlikely to be repaid, thus limiting their willingness to loan large amounts of money into existence.
You will be able to confirm that practically anybody you know either receives money from an inflation source or supplies those who do.
An 8% annual inflation rate - a realistic estimate considering that economic growth masks the true increase in the money supply - enhances the value of hereditary capital by 2,200 times when compounded over a century, or 220,000%.
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