[18] Economists proposed various strategies to address financial stability, including the Chicago Plan's full-reserve banking.
[19] Irving Fisher's "The Debt-Deflation Theory of Great Depressions" (1933)[20] analyzed how debt cycles contributed to economic instability.
[32] Martin Wolf, chief economist at the Financial Times, endorsed full reserve banking, saying "it would bring huge advantages".
[33] Martin Wolf, Chief Economics Commentator at the Financial Times, argues that many people have a fundamentally flawed and oversimplified conception of what it is that banks do.
[28] The credits and debt banks create play a role in determining how delicate the economy is in the face of crisis.
[34] For example, Wall Street caused the housing bubble by financing millions of mortgages that were outside budget constraints, which in turn decreased output by 10 percent.
[35] Economists that formulated the Chicago Plan following the Great Depression argue that allowing banks to have fractional reserves puts too much power in the hands of banks by allowing them to determine the amount of money in circulation by changing the amount of loans they give out.
[35][page needed] Rothbard likens this practice to counterfeiting, with the loan banker extracting resources from the public.
Caplan contends that it is part of the common definition of a modern bank to make loans against demand deposits, thus not constituting fraud.
[45] As financial markets seemed to have recovered more quickly than the 'real economy', Krugman sees the recession more as a result of excess leverage and household balance-sheet issues.