There is nothing at all incompatible with FRB in anarchy. The difference is once FRB becomes honest it stops being FRB and starts being a risky investment model. It could be lucrative, it may not be, that will depend on the reputation of the firm. FRB wouldn’t be FRB at all but much like holding your money in stocks.
The key points here are
A) Honesty
B) Allowing interest rates to fluctuate at the market rate.
“Now there isn’t. It has been legalized and the government guarantees all deposits. Remove the guarantees and it must operate by deception. Are you familiar with the history of banking?”
i guess this is correct.
if i put gold into deposit and receive notes corresponding to the gold-weight that was deposited and believe the gold to rest in vault while my notes circulate ~and~ the gold in vault actually ends up getting loaned out as well…well, third parties would likely then be getting defrauded to some degree. at least to the extent they believed the notes to correspond to a gold-weight in a vault. if they know there is a chance they mey not be able to get gold because the notes for gold-weight outnumber the actual gold-weight - then i guess its risky behavior. i guess damanding specie or a better guaranteed note would be a remedy.
when it comes to fiat-paper-currency, and someone knows the govt is shoving it on them via printed notes that are just printed notes and laws making bookkeeping entries roughly the same thing…many may not like it but it is probably tyranny at that point..and not fraud.
it does seem from what i have read (if it is true) that when the notes begin to greatly expand beyond specie it has been carried out by a govt and not so much a large scale private swindle.
Excuse me for saying this, but you sound like you are taking your talking points from a collection of Horwitz blogs.
The definition of inflation is arbitrary and bares no catallactic significance. Mises himself points this out in Human Action. Don’t take this route because if you really want to go by what Mises said, then he almost always referes to it as an increase in the money supply.
Why? because you can only increase the money supply by creating money out of thin air? What about the production of commodity money. And if you are so familiar with “Money and Credit”, how can you possibly not understand that equilibrium can be (and usually is) achieved by prices adjusting.
Which I’m sure you will get from reading Horwtiz blogs taking quotes out of context and turning him into a supporter of monetary equilibrium theory.
I concede. I mean, “charity is not an economic good”, I just haven’t reached that level yet.
exploded all of my positions meas what? that you just assert the contrary without proof or anything.
Listen, I think this is a sign that this argument is going no where.
Go do some more studying. And not just you. All of us. Even me.
Read some more Mises (Human Action), read Rothbard and not Horwtiz talking about Rothbard. Then maybe in a few weeks or months, you’ll come back with some fresh ammo, and we can have a more meaningful debate.
Oh please, I’m entirely unfamiliar with his work. I’m just now getting into free banking because of Wicksell (1898).
What? When people hold more cash then they deem necessary for transactions, they will spend, and that will increase prices. Rothbard’s definition of inflation doesn’t consider human action in anyway whatsoever. I think you’re confusing money demand with the mechanical version of the quantity theory. What pages are you talking about exactly? I’ll look it up.
I misspoke. I meant to say charity has peculiar and unique characteristics. But what does this have to do with anything?
Yes, equilibrium will be restored when prices adjust, but prices will fall, first for consumer goods, then for producer goods, causing all sorts of disturbances. There are also price rigidities. This definition is important because it includes bad deflation (there’s good deflation and bad deflation).
Yeah, because you refuse to answer the question.
Uh huh.
as interesting and useful as it us to understand the current money system and how to undo it or change it and the sort of incorrect charge that rothbardians (if there is such a thing) woudl ban it. additionally it should be asked if it is harmful?
it seems sort of empty to wonder about consistency of rothbardians and not question or investigate if what they would like to see banned (perhaps in a enlightend sense) does harm.
in another discussion about the 95% value loss of the dollar, an individual posting says inflation (of the variety done now) hurts most people.
i said…
"if you were alive to see your dollar lose 95% percent of its purchasing power and not receive 95 percent more dollars it (inflation) would really matter…and may still matter to some even though they do have 95 % more dollars.
another poster said: I think it definitely hurts some people. In fact, I think it hurts most people."
.
i assume this person thinks value robbing inflation hurts most.
the poster of this thread says "they (rothbardians, if there even is such a thing) believe that Fractional reserve banking must be banned, though it naturally emerged through voluntary and mutually beneficial cooperation. "
i dont know if the original poster was around when frb voluntarily came about (centureis ago?) or if it some how took root after a swindle of some sorts.
i have also seen numerous references to inflation as an ill or a disease or preceeded by numerous other negative adjectives. all throughout lrc and mises.
if some believe it should be banned, i guess it would be because it harms. this harm is caused by…peoples own ignorance? govt tyranny? frb, even the market variety, has shown itself to be more wealth robbing than building?
Why does the market fail when it comes to banking?
Why is this regulation necessary?
What happens when fractional reserve banks emerge naturally, and start popping up everywhere?
Who and how will you enforce this regulation?
Where’s the consistency from the “anarchists?”
did those questions get answered?
I’m not reading through all this but…
Could we hold off on the “stupid Rothbard” comments, he may have been wrong but lets not insult the (very brilliant) man.
Also, I believe you (Esuric) and I had a very vicious argument about this very thing, glad to see you’ve come around.
Not everyone here is Anarchist. You may want to keep that in mind.
Snowflake answered adequately on the second post.
While as of late I have found myself in disagreement on a few items with Mr. Esuric, I’d like to point out that I deeply respect and appreciate his ridiculously knowledgeable input on these forums. He’s made some pretty valuable posts.
Disagreements are fun, and thank you.
in looking over the original questions…i dont know if it the market failing where it concerns banking as it is a government failure.
it seems the only time depositors have lost out was when fractional reserve banking was in effect if the information i have read at mises sites is true…market failure may not be an appropriate description .
out side of bank heist or volcano, fully backed reserves wouldnt fail. only a particular bank fulfilling a role as a storage and transfer.
i dont know the extent that the rothbard called for govt regulation or market regulation or
both depending on context. im sure consumer reports or industry groups do some form of independent monitoring and regulation…standards bodies etc. that doesnt seem inconsistent.
if frbs emerged on the market i assume rothbardianz would hope they would become regulated to be able to always meet depositor demand or contract stips. maybe they base their regulation desire on the fact that depositrs have always lost with frb and never 100 reserves.
if you mean rothbardianz to mean anarchists in your orignal post…they seem to consistenly say frb is harmful.
Rothbard’s definition includes more. Please stop creating strawmen just to make yourself feel better.
If it includes more, then why could you not be bothered to actually say what else it included?
“1. Why does the market fail when it comes to banking?” What do you mean? How has it failed?
“2. Why is this regulation necessary?” Why is what regulation necessary?
“3. What happens when fractional reserve banks emerge naturally, and start popping up everywhere?” I don’t understand why they would.
“4. Who and how will you enforce this regulation?” Why would people do business with someone that is committing fraud, for very long?
Spare the theoretical explanations, you misunderstood my comment. What precise terminological definition a person chooses for the term inflation, by itself reveals nothing about his economic theoretical analysis of the effects of an increase and decrease in the money supply. The term is useful only as far as you are sure precisely what economic effects the author is attributing to the term.
So how Rothbard may have used the term precisely or how Mises used it is immaterial. They are both describing the same effects of an increase or decrease in the money supply. Although, again, Mises in most of his writings used the term to simply describe an increase in the money supply, period.
From the online pdf version of Human Action, starts at page 422. Inflation and Deflation; Inflationism and Deflationism
It starts with: “The notions of inflation and deflation are not praxeological concepts. They were not created by economists, but…”
Now, go look it up.
Listen, you are really really not familiar with Rothbard.
Rothbard’s treatment of “Credit and Money” is nearly identical to Mises Theory of Money and Credit. You can see this in MES in detail, or you can also see this in the book you quoted before; “The Mystery of Banking”, chapters 3, 4, and 5. It is a pure Misesian theory of money.
Stop already with the false assumptions. It is obvious that you are not familiar with Rothbard, and it is also becoming obvious that you are not that as familiar with Mises as you think you are. Go read Human Action. start at CH 17 if you want to immediately get to the money ,credit, and banking part.
Why does the market fail when it comes to ice-cream?
Why is this regulation necessary?
What happens when fractionally filled ice-cream cones emerge naturally, and start popping up everywhere?
Who and how will you enforce this regulation?
Where’s the consistency from the ‘anarchists?’
What you will find on this site is that once it is demonstrated that FRB will exist in a free market, like you are doing with your questions, that the thread will be deleted, lik eth last one was. The Austrians can not answer the most basic questions when it comes to FRB. I and several others have repeatedly demonstrated the following:
There are no banking contracts that state a bank is warehousing money and that the clients money is not at risk. In fact the banking contracts that have actually been examined on this site all state the risk to the person who puts money in the bank should the bank fail. The Austrians can not produce a single current contract that states otherwise. The entire demand deposit contract is 100% fictional.
FRB exists right now with these types of contracts with out government guarantees. Most offshore banks practice FRB, this is known by their customers, and they have no government guarantees. The question of will FRB exist without government backing has already been answered. It is not hypothetical. We have real world examples right now.
The Austrian cult has invested so much effort and literature to this topic that they can only repeat mantras now. Any thorough examination of the facts discredits their theory.
So? this is all within the framework of current banks, which we all agree hardly constitutes anything close to a free market, which is what we’re trying to describe.
Actually all other forms of warehouses operating on 100% reserve, including commodities like gold and oil.
Citations. Now.
Well its easy to think we’re wrong when you completely ignore people who know what they’re talking about. Esuric and friends have only focused on the weakest arguments, avoiding answering my questions and Knight of BAWAA’s. Its easy to think you’re right when you selectively filter people out.
What exactly is it the Austrians cannot answer?
Your examples are tied to a lender of last resort banking system. So it’s impossible to know what lending would look like otherwise. Your simply speculating, and you may be right, but its not fact.
This kind of nonesense hurts your credibility.
Do you have a reference for even one off-shore bank that is not government backed?
One needn’t be an Austrian to see FRB for what it is: fraud. The comfort of current depositors under FRB comes purely from the government’s guarantee and its tacit assurance that the Fed will print whatever is needed to make all depositors whole. It’s really a grand Ponzi scheme (or game of musical chairs), except everyone knows about it and everyone is assured there’ll be enough chairs for everyone to sit on when the music stops. Thing is, the true number of chairs is only found out AFTER the music stops, and when the music REALLY stops then there won’t be a chair even for the Fed (i.e. the government) to sit on.
In a truly free market, there will be a clear separation between two institutions:
Warehousing – where a customer PAYS for the service of securely storing his wealth (without exposure to any investment/lending risk.)
Investing – where a customer PAYS for the service of his wealth being exposed to risk (investing, lending, etc.) for the purpose of making a return (profit).
There’s absolutely no need for fraudulent institutions issuing fraudulent notes (claims) on non-existent wealth (assets) for fulfilling the above basic functions, hence the free market will deal with FRB just like it deals with any other fraudulent enterprise (such as fractionally filled ice-cream cones, as nicely pointed out by Nielsio above.).
Z.