I gave you an example. Most offshore banks don’t operate with government guarantees, they practice FRB and their customers knowing this still use them.
What questions, your entire argument hinges on these fictional demand deposit contracts. It has been demonstrated that those don’t exist.
Actually all other forms of warehouses operating on 100% reserve, including commodities like gold and oil.
Do you have a banking contract that says it is warehousing money?
This
First, please provide an actual banking contract that says your deposits are not at risk and that the bank is warehousing your money. Second, you can not explain FRB banks that exist offshore without government guarantees. According to you this should be impossible…yet there they are.
No, they are not tied to a lender of last resort, I am not speculating. You think some government is going to step in when some offshore bank in the Caribbean fails? Who do you think is going to pay all that money sitting in the Cayman Islands, not the Cayman Islands government for sure. Your lack of knowledge of offshore banking does not mean I am speculating.
Your joking right? Most offshore banks are usually not allowed to do banking in the country they reside so the government specifically does not have to back them. Do you think the government of the Cayman Islands is backing all that money sitting in the Caymans?
Actually, you can just look at accounts in the US over $250,000 which are not guaranteed by the US government. Nobody is backing those FRB accounts…but people still use the banks and have accounts with over $250,000. More evidence destroying your theory.
Still no answers as to why the real world is doing what you say is impossible. I realize many of the posters here are young and many still in University but the world is a lot bigger than the US and Western Europe. When the real world is doing what your theory says is impossible…you need to reexamine your theory.
Bernie Madoff was there. Stanford Financial, too. What is your point? Fraudsters and fools exist, hence markets must be supportive of both?
Z.
A citation is a link to where you get your information from so I can check it for myself.
Scroll to the first page. I beat esuric back in my response to him. He never answers me again. KoBAWAA’s point is similar to mine. Esuric doesn’t address it, he evades the issue.
No it hinges on an understanding of free market economics. Simply because none exist in the status quo is no point against me because we have anything but free banking.
Probably not since my bank is a government FRB. But we’re saying in a free market these would be the only banks around.
This isn’t the issue. Austrian’s aren’t against FRB, they’re against manipulation of prices, IE credit. FRB is entirely feasible on a market where it’s rates fluctuate based on market accord. The statement you provided above is not the position of all Austrian’s. Stop putting words in people’s mouths.
Now FRB IS entirely fraudulent in the existence of a lender of last resort. If this doesn’t happen in other locations then thats not an issue, those banks are likely far more responsible. Our banks are less responsible simply because a Lendor of last Resort exists.
You may want to re-educate yourself on what the various Austrian positions are. Don’t lump them all together.
Yes we can. Market demand.
your putting words in my mouth again. I think you’d be better off arguing with a wall since it doesn’t matter what I say. Please provide evidence where I argue this would not be possible?
Do me a favor and don’t tell me what my position is. It’s highly offensive.
If they are not then great. If they are honest then people know they are investing their money, not warehousing it.
Yes. 1st world banks, IMF, and more. Many 3rd world countries are in perma-dept because of the IMF. I am wondering how much research you’ve actually done on this.
It works the same way domestically. A bank in need takes a loan out of a neighbor bank, untill they need a LOR. The IMF has been doing this a while.
Easy on your attacks because as I have just shown it appears you may want to look in the mirror when you state that.
Max you’re missing the point of the austrian position.
If the market wants FRB so be it. What we don’t want is manipulation of prices, IE interest rates.
In a case where FRB is functioning successfully it’s probably done by a responsible bank and depositors are happy to participate in a wealth generating investment model.
You’ve basically created a strawmen from the inputs of a few Austrian advocates and tagged that to the whole, then attacked us on that point even though it’s not the position many of us hold.
Your debating technique’s seriously discredit you.
Part of your confusion with respect to the 100% reserve advocates is that you fail to differentiate between money substitutes and fiduciary media.
precisely, they are substitutes. The problem is that fiduciary media aren’t substitutes either. No, it’s not a Rothbardian twist, it’s a Misesian observation. They may masquerade as such, but they aren’t.
So do do all forms of corporate or government bonds, and other financial instruments, but people don’t exchange them. The’re not consider liquid enough to be exchanged as money, for the obvious reasons.
Yes, but this pertains only to money substitutes, and not fiduciary media. If the public cannot tell the difference, then you should be asking yourself: How come the public doesn’t get confused with other financial instruments? Why only with bank notes? Bonds have a dollar face value, but nobody would confuse them with money.
No. but to understand the problem you must stop thinking in the context of today’s system where the government guarantees deposits and issues its own notes backed by nothing and says: You must accept these notes as money or go to jail.
So let’s abolish all government involvement for a minute.
False analogy. I don’t know cosmetics so I have to change industry.
If a copper coin is sold as a gold coin because it looks like an exact replica, is it a valid voluntary transaction where no fraud has been committed? Or do you contend that the consumer is at fault for not being knowledgeable enough to distinguish between real gold coins and counterfeit coins? The counterfeiter has committed no crime as long as he doesn’t force anybody to take his coins? Would this be your position?
If you don’t understand the history of banking and how fiduciary media evolved, then you cannot appreciate the above analogy. But the point is that people accepted bank notes on the assumption that they are money substitutes, a ticket that is more convenient to carry around instead of the gold coins that are safely stored in the banks.
If they knew the real nature behind these notes, then they would not treat them as money just as they don’t treat bonds as money. It is irrelevant to argue what people know or don’t know today where the whole thing is orchestrated by the government itself.
This is a negative proof fallacy. You can’t prove your argument by claiming someone else doesn’t have one. Christians in particular should be carefully attuned to such fallacies, because the sort of proof you ask for could be used to disprove the existence of God.
Of course, in a free market there will be no limit to practicing idiocy. The only “wealth” generated by FRB is in the eye of the idiot “investing” in it.
Z.
is this clumsily worded or do you mean this??, that most offshore banks operate illegally vis the countries that they operate in ? seems a little bizarre of a claim. offshore banks, are offshore relative to the depositor…they are not offshore of themselves.
Do those banks guarantee deposits on demand and do they lend out money?
Do people have some other non-government bank option to use instead? In other words, can someone open a bank without getting the governments permission and without following its rules?
But thats up to the consumer, no matter how much of an idiot you think they are. If they choose an investment model thats risky they need to pay the costs when it fails.
FRB is a bad word in the context I am talking about. I’m talking about on a free market how the demand for credit will naturally rise and fall. As the demand for credit rises those who have savings may be willing to offer up a part of their savings stock for lending in hopes of receiving a profit on interest. In this case FRB banks would no longer be banks but services that match consumer with lendors.
If the firm is particularly risky they will fail and people will stop investing with them. If this is somehow inherently wrong the market will address it, no other argument is needed beyond that.
Does that sound like something a bit more compatible with you?
Even in the US there is no guarantee on funds in FRB’s above $250,000. People have lost money when banks in the US have failed. Can we not agree that above any guarantee there is essentially an unregulated market in FRB which according to your theory should not exist? Your belief that the IMF is guaranteeing all offshore bank deposits for any amount is absurd.
Your whole theory is predicated on FRB being fraud. Fraud/theft should be outlawed. You can not demonstrate that it actually exists as you describe it. And what you point to as being FRB fraud isn’t.
Despite my request for you to not state my position you continue to do so.
Do you even know what my theory is?
In the states without a LOR banks would fail. Thats exactly what they need to do for risky lending, fail. Thats market insentive not to be a risky lendor and not for depositors to deposit at risky banks. Indipendent rating agencies can take care of the rest.
Now I do agree that it could be more honest. Most people want to warehouse their money, there should be a market service for that. The only reason that there is not is that we have a model where it’s not necessary, almost all deposits are bailed out regardless of how risky the bank is.
Accept it’s the fundamental reason why many 3rd world countries are in decades worth of dept. They don’t bail out individual banks they lent out exhorbant amounts of money to governments to do that for them.
I can demonstrate that if I would like to warehouse my money than I would not deposit it in a FRB system.
I can demonstrate it t hat if I wanted to expose my savings to risk in hopes of gaining a profit I may partake in lending, and partner up with a lending service.
In that case it’s not FRB any more because warehousing and lending are separated. If people don’t lend responsibly they loose their savings.
This is simple market operation.
Let me get this straight. Your position is that there all of these banks out there practicing fraud because they are warehousing money and secretly loaning out the money without the customers knowledge and when asked to provide one example you say I am being unreasonable. When you find a bank practicing your described FRB please let us know and until then the Austrians should stop writing all this fiction and pretending it is non-fiction.