To Tacticat's original point:
In the years to come, if banks jump on the Bitcoin bandwagon and start offering Bitcoin deposit accounts, Bitcoin will become affected by Fractional Reserve Banking.
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For this reason, since we can easily avoid bitcoins created by fractional reserve banking, it might be necessary to call them something different. Call them Bank-bonds, Debtcoin or whatever but now we have the chance, as a community, to make a distinction between the two and start using different terms which, in the end, will increase public awareness.
Our thinking has been muddled by considering dollar denominated bank accounts including checking (M1) and even savings (usually M2) as really being dollars, equivalent to currency physically in circulation (M0). The classical scenario of money creation is this: (the first four points work for both USD and BTC)
1 - Three people in the economy: you, me and an FRB bank
2 - I deposit 20 MBTC in the bank
3 - The bank loans you 16 MBTC, retaining a 20% reserve
4 - Now I own 20MBTC and you own 16 and there are 36MBTC out there now
5 - But wait! The 21 MBTC limit has been breached!
Obviously some of that 36B ain't bitcoins, it is certainly not part of M0. But in the US we call them all dollars, and we relate the full 36M to inflation forecasting because all 36M of them are available to bid up the prices of goods & services.
But how would we be able, in a bitcoin setting, to tell the difference? It would only be possible if what you get in step 3 up there is not really bitcoins, and that's where the Debtcoins [or whatever] come in. Thus an FRB bank could NEVER lend bitcoins to anyone.
There would have to be a facility for sending, receiving, storing Debtcoins in Debtcoin wallets. And if they're not fully worth a bitcoin, why would anybody take out a loan like that?
Are BTC and FRB incompatible?
