The one who want free banking is the statist, what nonsense are you peddling now? You are the one siding with the Commodity school (statists)Thinking about conveniently leaving stuff out:
There is nothing anti-state about a gold standard.
Also:
Still waiting.
Speaking of Bricks, explain to me how a brick of gold (or any commodity) is real wealth?
@ nirgrahamUK
Your response doesn’t even get at my question. I’ll ask it again: Do you agree or disagree that the only difference between demand deposit and time deposit regimes is the formalization of the time of withdrawal?
While admitting I didn’t read the whole book myself, it seems to me that Mises position in the TMC is not fully consistent. For instance, in chapter 4 section 2 “The case against fiduciary media” he seems to claim that there’s really no case against them
Frankly that sounds like a typical inflationist fretting about the non-problems created by ‘deflation’.
On the other hand when he makes proposals about 'currency reform he says
You haven’t expended enough then, as I don’t have any confidence in you.
We all want free banking, we just disagree on how free banking will manifest itself. Austrians believe that FRB is inherently self-destructive, and as such, it will lead to 100% reserves. The problem is that when FRB destroys itself, Keynesians, Monetarists and Neo-Ricardians will say, “Hey look! This is what happens when you listen to Austrians! Time for another central bank!” Bankers today don’t understand 100% reserves, and even if they did, they wouldn’t see it as preferable (for obvious reasons), at least at first.
What exactly are you supporting? Are you saying that government controlled fiat money is preferable over market money, that is, commodity money? Or do you have some strange scheme where banks create fiat money which will be accepted by the general population without legal tender laws? What exactly are you talking about?
You’re coming around.
Government and banking is a bad mix.
@ Juan
It is clear to me that Mises is advocating for FRB free banking.
In your bolded quotes Mises is reffering to central bank injections of reserves leading to forced saving. This is entirely different from FRB itself.
Juan, you need to read the book in its entirety to understand Mises’ position. The book is 99.9999% against fiduciary media and FRB; Mises states, over and over again, that the creation of fiduciary media presupposes an artificial reduction in the market rate of interest relative to the natural rate. The above passage is the only quote in the entire book which is confusing (literally). Mises is talking about the benefits of fiduciary media when it’s demanded as money and not as capital (something Hayek says as well), and acknowledges Smith’s objection to commodity standards (but later explains how the benefits of the gold standards greatly outweighs the cons, part 4 MONETARY RECONSTRUCTION). Mises monetary theory picked up where the Wicksellian framework left off, and was picked up by Hayek who later explained, with greater detail, how inflation artificially extends the structure of production. TMC is a warning about potential fiat systems, etatism, and inflationary policies.
formalization rather handwaves everything of import away.
like so.
the difference between buying something and stealing something is merely a formalization of the legitimacy of withdrawal.
demand deposit and time deposit, involve different relations between owners and property. ‘the time when the withdrawal happens’ is only one element of variation.
Because it’s considered wealth by reasons different from its exchange value. A piece of paper is just a piece of paper. Paper and ink are not really scarce, don’t last, are not shinny, can’t be divided and retain value, etc.
Maybe you can explain why you needed $20 dollars to buy an ounce of gold in 1900, but today you need $1000 dollars ? There seems to be something about gold (or commodities) that a deranged - ultra-subjectivist and ultimately fallacious analysis of economic phenomena can’t take into account.
Horseshit. You gold standard pushers (not all, of course) seem intent on making up ridiculous claimes about fraud to keeping FRB out. Your assertion is nothing more than an assertion, as the same can easily be said of any standard. Also, you are mislabeling Austrians by they believe that FRB is inherently self-destructive. Some do, and they are wrong. The gold standard has already destroyed FRB many times before, libertarians need to be more consistent.
No. How market money equals commodity is just more uninformed assumptions on your part. No scheme is necessary, why the general population will demand that their bank notes are backed 100% by commodity X, when they’ve known and accepted the existence of more efficient means of banking is a question I’d like answered. It seems to be nothing more than harking upon the “good ole’ days” that never really existed.
Read the chapter of Human Action I mentioned in previous posts. He’s advocating for free banking, NOT for FRB. Two different things.
What are the other elements of variation?
Not really scarce? - If their was ever a more ambiguous term. If the bank puts sparkles on the notes will you value them then?
Government.
I know Spain just prospered and prospered from all that shiny gold.
Do you realize that Mises, whom you invoked a lot, was a staunch advocate of a government enforced gold standard. Big oops.
LOL. The real question is why people would accept an inflationary system absent force and fraud. And please stop pretending that banks don’t use force and fraud. They always did and they still do.
Oh my god. Maybe you should read the first two parts of TMC, the part where Mises introduces the regression theorem (google it). You know, the theory that made him famous? The theory which put the ‘Austrian circle’ to rest! You’re completely ignorant of Austrian monetary theory, business cycle theory, and subjectivism. Money emerges only two ways: naturally by the market (from direct exchange to indirect exchange and finally into a monetary system, where the monetary unit is the item with the highest degree of “marketability”), or from Government violence and decree. If I went to Somalia tomorrow as a banker, and told them I’m going to solve all their problems by printing my own money, and that they should trust me, they would probably skin me alive. The value of money today stems from its value yesterday, and so on and so forth. We value dollars because at one time they represented gold (1/20 an ounce of gold), which was chosen by the market as money because of its qualities (doesn’t spoil, easily exchanged, used for ‘industrial purposes’). This concept is so well known that it’s included in almost every standard intermediate macroeconomic textbook.
in a demand deposit the depositor owns the money and can use it always ( at any time. ) no credit recipient could praxeologically ‘own’ the money and use it always (at any time). the bank itself does not own the money and can not use it always (at any time)
in a timed deposit the depositor does not own the money for some duration, whilst during the interval the credit recipient or the bank may own it and use it.
Esuric,
I have no problem accepting that Mises was overall against fiduciary media. It’s too bad that some passages are a bit ambiguous.
I’ve said he was wrong multiple times now. Did you just happen to miss those?
Its not an inflationairy system so… problem solved.(We’ve already been over this, maybe you missed that as well)
And that’s the only way the full-reserve banking will ever come to prominence.