The problem is that you mix tools and how they are used. Fractional reserve banking is not evil in itself. It basically creates, through credits the opportunity for economic growth. That being a company has a great idea, but not the capital to realize it. The bank has the capital, but not the idea. Through a credit it is possible to realize the idea and it is a win/win situation. The company makes a great product which it sells, the bank makes a profit through the credit and maybe even the people putting money into the bank make something off of it, though savings. This is all and well when you ensure that the bank makes proper risk analysis on the credits and on average comes out on top.
What you should really be afraid of the the credit bubble. What we are currently seeing is that individuals are given credits, which means they are now spending money and helping the economy grow, but this is at the cost that in the future this person will have less money to spend, since he is repaying the credit. So the economy slumps, as a result "to help the economy" more credit is injected. This has been going on since the 60s and in totally high ways since the 80s. The result is that the economic growth is propped up though credits and growing unnaturally. The economy is extracting money from individuals more than they can afford and the only way to keep the current pace is to increase individual debt. The situation is additionally aggravated by greedy bankers which gave out sub prime credits. There will be a point where the individuals dept is so grate that the scheme can't go on. This debt fueled economic growth is the ponzi scheme.