As the chat shows, the price of RAM will be much lower if fractional reserve. But I don't understand how this happens? Any thoughts?
This is just a theoretical thought experiment. RAM is not recommended for investing as it is highly speculative. The probability of this fractional reserve of RAM formula being used is very low. RAM is a very young market and is in growing pains currently.
RAM is intended to be used by dApps and the speculators are just helping finding the price.