I'm the author of the "pure nonsense" edits. While I admit that my original posts were not very intelligible, I maintain that my position is correct.
Merely by depositing Bitcoins into Mt. Gox, and Mt. Gox lending out a proportion of them to someone else, the money supply is not affected. It only would be affected it someone accepted the Bitcoin deposit as a method of payment. At the moment, this is only even possible though the redeemable "Mt.Gox code" and the acceptance thereof is limited.
That is not true. How do you think fractional reserve banking works?
Lets look at USD first (because everyone is familiar with it).
You deposit $100 in Bank of America.
They lend $50 out. The money supply has increased $50.
You need to pay a bill and withdraw $10.
BofA gives you $10.
BofA doesn't issue an alternate script, a BofA token. They give you USD which are just as accepted as the USD you deposited and the USD they lend out.
You keep going back to this belief that Mt. Gox (or any "bitcoin bank") would need to issue some alternate currency/script/note and then that note be accepted as equivelent to BTC. Where do you get that idea from? I believe that misconception is the basis for all of your misinformation.
Lets modify the BofA example for Bitcoin.... BitcoinInternational Bank.
You deposit 100 BTC @ BIB.
BIB loans 50 BTC to a borrower.
Money supply has expanded 50 BTC.You need to pay a bill and withdraw 10 BTC.
BIB gives you 10 BTC (not some alternate bank script, they give you 10 BTC in a normal Bitcoin transaction).
Simplisticly this is the entire basis of fractional reserves.The difference between FRB with gold/fiat and Bitcoin is that the derivative media of exchange (hypothetical Bitcoin-substitutes) do not provide general advantages over Bitcoin itself, and therefore there is little demand for them. People might use bank notes because gold coins are too heavy, or EFT because they are not at the same location. This creates a demand for exchanging these claims instead of the original gold (for example). With Bitcoin, these problems do not exist, because the Bitcoin value of a storage medium does not affect the weight of it, and you can transfer Bitcoin electronically without an intermediary. So there is little demand for the features which normally require banks.
That is a whole different argument. First of all lets drop this bitcoin-substitutes. Does BofA issue USD substitutes or do they lend out USD, accept USD deposits, and return USD deposits. A bitcoin bank would do exactly the same thing.
The question of demand for Bitcoin banks is a genuine question. There may not be much need for Bitcoin banks thus the amount of deposits would be low and the MONEY MULTIPLIER for Bitcoin economy would also remain low. However that is different from saying it is impossible to have fractional reserves.
Demand for going to the moon is low but it isn't impossible to go to the moon.
We don't know how much end user demand will eventually be created however that doesn't make fractional reserves impossible. Convenience is only one reason people use banks. Security is another. The ability to earn yield is another.