Deposit insurance ruins Capitalism because people are able to increase the money supply easily instead of earning wealth

The banks increase the money supply when a loan is made, even if the reserves are reduced in this process, the money will return quickly to the banks to enable them to make more loans. The person who made the original deposit now must rely on the Government guarantee, to get their money back, whereas before they were confident that the bank retained the money. If we don't trust the Government guarantee then we can use a fully reserved bank instead, by removing our deposits, the bank will not crash because the Government will simply print more and more. This process makes earning money (to mean protected value) difficult because anyone that is willing to get into debt can quickly become as rich as someone who must, for rear of debt, earn their money. If people can easily 'borrow' wealth this makes money worth very little, measured only by the unpleasantness of debt; people can earn more by taking out a large mortgage, hard work is made redundant and we compete to be worthy of being given credit.

Fractional reserve banking makes Capitalism fail to work properly because it ruins the value of labour and work, since anyone can have wealth if they can get an inflationary loan. It's easier to get a mortgage than to work for a living, when buying a house and we then see that land is the primary form of (material) wealth.