A debate such as this should not be about “winning” in the first place. The lack of civility and humility on this thread shows that this has become nothing more than an ideological battle, not befitting of scholarly discourse.
Although I favour free banking with fractional reserves, a sudden transition from a 100% reserve system to fractional reserves could tigger a business cycle. However, such a rapid expansion of the money supply would be a one time shock to the system, since competition between banks would stabilise it at its new, higher level (with small fluctuations in response to demand). At least, this is how it seems to me. In any case, this scenario isn’t going to happen.
Lee Kelly
Because he agrees with your mistaken views…
When you say ‘latter’ you are talking about latter chapters in the TMC credit which you claim to have read ?
By the way, in HA, which you didn’t read either, Mises makes clear that he wants free banking because it’s the only mechanism than can stop stop the issuance of fiduciary media.
This last bit sounds slightly inaccurate since one gets the impression (I do at least) that banks don’t benefit from legal tender laws and credit expansion and that credit expansion exist only to benefit the state. In reality credit expansion benefits the state, the banking mafia and other special interests.
I agree. It should be about the truth.
Yes, and this is from somebody who has resorted to such desperate arguments such as “Time deposits are the same as Demand deposits” in order to justify FRB. I got tired of this debate when that silly argument has been adequately addressed, yet they kept insisting.
I know Jake admitted at some point in time that something was unjust, but in current society it still was necessary, so, that proved enough for me that it was a false argument he was trying to make. I can’t remember what that something was, and don’t feel the need to look for it. But justice is a species of truth and so I could figure the rest out from there.
Umm, I never said anything of the sort. Either quote it or it didn’t happen.
Excuse me while I resolve this entirely too tedious debate: In a free banking system, banks would compete to provide checks/depostits that costumers consider the soundest (i.e, fully redeemable in whatever currency(ies) is selected by the market. Without a FDIC or any banking regulatory powers, costumers would have all incentive to be on the lookout for their respective banks; banks would therefore take this into account in their operation. In respect to fractional-reserve banking, both the demand for sound checks/deposits by customers and the demand for redemption in real currency by other competing banks would serve as a check on the rate of expansion against reserves of any one bank. In other words, with out any central-coordinating banking power or a ‘lender of last resort,’ banks would be forced to conduct conservative banking practices in a competitive environment.
I don’t even see how that is a controversial. They are not currently the same, but if (modern) checking accounts were banned, it is reasonable to believe CDs would begin trading like banknotes. This has still not been addressed in any way that isn’t ad hoc and baseless. Just look at modern electronic money. There is no law that anyone has to accept that and yet it is accepted by most people.
Did you forget what this thread was about? No ban! The market would reject FRB so your point now is irrelevant. And the original argument by Avner about time deposits=demand deposits was about the current system. Check his original argument. You have now just changed it. ######Anyway, why won’t corporate bonds become money?, or stocks? or mortgage securities? or what ever you want? Because they are not money! Money is a free market phenomena that evolved for a specific unique function, therefore CD’s won’t evolve into money for the same reason that your title of ownership over your car won’t. Perhaps, somebody here was right when he questioned your understanding of what money is. Today fiduciary media parades as money only because of the government literally enforcing this fraud with their legal tender laws.
Because he was correct. I don’t know what your intentions are by repreatedly characterising my views as “mistaken” “babble,” “wrong,” etc… without substantiating them, you just sound like a broken record.
I never said ‘latter’.
We’ve been over this Juan, why you toss in unsupported allegations I have no idea. You specifically said that Mises was for a government enforced gold standard.
Try sticking to one story.
Regardless, Mises is right when he says free banking keeps credit “expansion within narrow limits” but the idea that full-reserve banks would simply out-compete fractional reserve banks is wrong. Perfect certainty doesn’t exist with either system and a full reserve system would have to charge a fee to warehouse the money and cover the cost of producing notes, in contrast with FRB where the depositor earns interest. Also, FRB better meets the demands of producers and note holders. And we know from history competitive fractional reserve banks have survived even when doubts spread about its solvency.
FRB has survived? Are you serious? So has citigroup and Goldman Sochs! So now you agree with Mises about “exapnsion witin narrow limits”? Mises wasn’t referning to 2% reserve, you know. What’s with the fee argument again? Anyting you store in a warehouse for safe keeping is now a waste. In that case, only high risk stocks are productive, because anything with a low rate of return starts to resemble a warehouse.
We are talking about free banking and its history. Anything in the current environment is just completely outside the topic.
Now? We’ve repeatedly said that competition will keep the banks in check, I disagree as to what the narrow limits are.
I’m not sure if you know what you are talking about. If you want your money to be warehoused, as most full reservers do, and not lent out then you obviously are going to have to pay the bank a storage fee. As they get no use out of money that just takes up space. Have you ever seen free storage for anything?
It was in the other thread. Discussion went here, then Here and Here. The next post of Knight’s said this and the discussion continued but I’m not posting the whole discussion. And that other thread veered off of this thread cause it keeps coming back up in this thread as on the previous page you say this.
A gold standard and free banking are not mutually exclusive. Mises supported both free baking and a gold standard. Too bad if you don’t understand how that works.
Try learning the basics.
Why not ? You never explained why people would choose inflation. Of course, no rational person would choose inflation.
Perfect certainty about what ? Regardless, you don’t know what you are talking about, yet again. You are confusing :
- commodity money
- CDs
- so called fiduciary media.
As do people who deposit their money in a full reserve bank - it’s called a CD.
…
We know from history that banking has always been a privileged industry. If you are honest, you admit it. If you are not honest…
We also know from history that fiduciary media, like fiat money always reach a value of…zero. Unlike, say, gold.
We know from history that the biggest economy in the world, and other economies as well, have banking systems which are fully cartelized, ‘insured’ and dependent on legal tender laws. We know a lot of things about the banking mafia that FRB advocates have a tendency to forget or overlook.
Ridiculous strawman which fully shows you don’t know what you are talking about.
Angurse: You can’t show one example of free banking. Keep debating the strawman who isn’t going to lend out his money. You’re doing great!
I don’t understand? Did you not say?
To offset the changes in the velocity of the money. With FRB its easier to meet the needs of a growing demand for money, when its warranted inflation doesn’t occur (in the long run).
Perfect certainty about the status of your money. Even in a full-reserve bank there is still a risk.
Please explain how I’m confusing them. I don’t recall ever mentioning or alluding to CDs, so please, please explain what you mean.
Fine. Then we have no reason to even think that a full-reserve free banking system ever existed either then.
Fine.
You cannot disregard history, only to turn around and use it.
Fine.
You cannot disregard history, only to turn around and use it.
Stop using history.
Would you please elaborate.
Please explain.