People will still be able to buy a house with credit. Their borrowed funds will come from individuals or entities with actual funds, as opposed to borrowing from a bank that creates the funds out of thin air.
I don't understand. The basic premise of fractional-reserve banking is that a bank accepts deposits from customers and then uses those funds to invest with. Limit "invest with" to "offer mortgages" (as with S&Ls pre-1980-ish), and we have what you just described.
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