So we’re back to it being a question of the probability of them defaulting on their contract and not the actions that makes it impossible for them to uphold all their contracts?
It’s all fine and good as long as you don’t get caught, right?
The Mexicans almost always don’t hit someone when they shoot their guns into the air to celebrate here in Phoenix also…
So you’re going to store gold and issue electronic bank money, is that it?
Money has some objective value of ‘time’ associated with it?
Do banks really tell their customers they can have their money on demand?
They seem to just tell them that they can have such and such amount of money on demand without it affecting their interest payments.
When you write a check or use your debit card do you call up the bank and ask how much they will cover or do you use the amount of money in your account as the limit for your spending? Ignoring overdraft protection and all that.
Why should contracts that cannot be honored in some hypothetical scenario illegal?
It’s all fine and good as long as you fulfill all your contracts, right?
Is Shannon’s law libertarian?
There is no requirement for a bank to start with it’s own capital reserves. If you loan money/deposit money in a bank then you have default risk.
I think I have described the system fairly well. There are several examples in the industry already that are backed by gold as well as others like Paypal which are not backed by gold.
Yes, time in relation to money is very important because people are willing to pay for the use of money over time.
It is the same event when you go to cash in your CD. You expect the bank to have the money. Your CD is not tied to a specific loan so the bank is using other loans that are being paid off at this time or using other funds from the bank. If the bank has enough defaults then when you go to cash your CD the bank will not give you the money.
Let’s suppose I said that instead of instanteous you had to wait five minutes for your withdrawal of your demand deposit is that ok? Then it’s not available on demand as you say so it is now a time deposit. Does that make any difference at all?
Do banks hand their customers a pamphlet explaining the Austrian/Currency School/Jacksonian/libertarian case against FRB when the customers create an account ?
What, all those bank runs throughout history were ‘hypothetical’?
Is it ethically responsible as long as the ‘hypothetical’ doesn’t become reality?
Isn’t that the point, it is impossible for them to fulfill all their contracts.
They say they have the money available when in reality they have loaned out the bulk of it, how exactly can they fulfill their contracts under such a system assuming a ‘hypothetical’ bank run occurs?
I doubt it.
It was the easiest way to show ‘almost always’ in actual practice.
From what I hear there was a lot, as in a crazy amount where people thought twice about hanging around outside, of gunfire on holidays but they ‘almost always’ didn’t hit anyone.
According to your ‘almost always’ theory this is fine because the percentage of ‘failure’ from this system was extremely low and you had a very good chance of not hitting someone when emptying a magazine into the air. It isn’t the action that is the determining factor but the rate of failure that determines if it is an ethically valid activity.
You mean ‘time preference’?
You know, if you were to read some of the ‘required reading’ then we could all use the same language and discussing something with you wouldn’t be like pulling teeth…
It they keep 99% of reserves they can hardly be regarded as a fractional reserve bank ?
‘Almost’ always ? And maybe the fact that one person doesn’t get paid will ‘almost’ always trigger a run on the bank ?..unless they keep 99% of reserves that is.
What are you describing anyway ? Past Scottish ‘free’ FRB banking ? Present FRB banking ? Future hypothetical FRB in a free society ? The thing is, if FRB was subjected to real competition it would be wiped out.
Well most people understand what the time value of money means. My basic point is that time deposits are in practical effect no different than demand deposits. People making deposits in a bank knowing that the bank makes loans with that money have default risk. That is not fraud.
If you didn’t want your money loaned out then you could put it in a system that did not loan money out and simply provided a storage service that facilitated transactions.
I do not understand why you think people taking risk by loaning money is fraud.
That’s your basic error, yes.
What’s non-libertarian about it?
I cannot believe we descended so low.
Debtors can hypothetically default. I still believe lending to be ethical.
It is only a fraction of all liabilities, no?
Future hypothetical I guess. Why it would be wiped out after coming into existence I have no idea.
Can it be wiped out before coming into existence ? =P
Seriously though, if your premise is that people prefer unsound money and unsound banking to sound money and banking, then maybe they’ll choose FRB…
Well since you have proven that it is fundamentally any different than loaning any other money I think people will continue to loan money in the future.