Yes, but where will they put the money they need to keep?
Huh?
The whole point is that it is fundamentally different since you both ‘loan’ the money and have immediate, direct access as if the money weren’t ‘loaned’.
Your whole magical time component of money doesn’t account for this fact or is it anything but a red herring.
The fact remains that when I deposit money into a bank they both credit the account as if the money were in their possession and loan out a significant portion which eventually gives 9 different people exclusive ownership rights over the exact same good. This ‘exclusive ownership’ is the fraudulent part since it is impossible for more than one person to have an exclusive claim over something at any single point in time.
I suppose you’re also going to claim that FRB isn’t inflationary as well?
Well, the money supply must match the ‘needs of trade’, you know…
I will. Is is inflationary only as much as the base money is.
Oh, ok…
Now you just have to explain how it isn’t inflationary without resorting to some Real Bills Doctrine BS.
Look, if I said that when you made your intial deposit that when you wanted your money you would have to wait five minutes before I gave it to you, would that change the entire arguement for you because it is now a timed deposit? A demand deposit does not mean you have exlusive use of the money when your not using it, it only means that you have the right to have your money returned when you demand it.
Max, did you ever answer how is it possible that assets can be both loaned and available at the same time ?
Do you undersand that credit can exist only if there are savings to be loaned ? Can’t you see that if money is available on demand then it’s not being saved so it can’t be loaned ?
No.
Savings accounts are technically a timed deposit in that they can legally make you wait up to 30 days or some such but in actual practice they’re no different than a demand deposit because of linked overdraft protection and the fact that they don’t enforce the waiting period.
You still don’t seem to be getting that demand deposits function as money while term deposits don’t. That’s the difference and not some arbitrary minuscule waiting period. Your average debit transaction takes a day or so for the bank to process and transfer money into the business account (while immediately deducting it from the customer’s account) but that doesn’t change the fact that a debit card transaction functions the same as money.
It is the role of ‘money’ that the deposits play that is the determination.
It is kind of odd how you can recognize that printing up gold receipts to gold that you don’t have physical possession of is wrong but the current FRB system does the exact same thing by allowing money to serve as fiduciary media at the same time as it is loaned out and not in their possession. The only real difference is the counterfeiting is done electronically these days.
So you’re still holding the party line that it isn’t a bailment contract?
Because, you know, if it walks like a duck…
Have you seriously not read anything on the Austrian view on this yet because all you’re doing is repeating the same arguments over and over while not addressing the actual issue in the least.
I am somewhat amazed you haven’t declared yourself ‘winner’ yet…
Unless you take the time to read an article on the subject and come back with an informed opinion in this matter that addresses the actual anti-FRB argument then I’m done with you on this thread.
It talks like a loan, since it pays interest.
If the base money is constant, then why should it be inflationary? Fiduciary media just cannot expand infinitely due to the threat of a bankrun.
In a 100% reserve system, how could a bank actually make a profit? what would be the new line of business fo that bank? How could a bank make enough money to pay interest to the individual who deposits money there?
The demand deposit only functions as money as you say when it is demanded. When the customer is not demanding the money then it functions as a timed deposit. A demand deposit as we have defined it here is nothing more than a time deposit with a call option.
I have not seen a compelling arguement for your claim that this is fraud. On one hand you are saying that timed deposits are ok but if I make all deposits in the bank a timed deposit (if only for five minutes) then you are still saying it is the same. In your world banks are not in the business of loaning money they only store money and hand out receipts, which is fine. I see no reason why in a free society banks should be prohibited from lending money and why depositors should be prevented from depositing in banks that lend out that money.
As long as the depositors are aware that the money in the bank has some potential of default risk (although this could be insured) then I do not see a coherent arguement for fraud or why people would not engage in this type of banking.
A lot of group think on this forum. Is the point of this forum only to bow down to what every person who claims to be an austrian says? Are you not capable of your own critical thinking?
Look, is not insurance a bit like fractional reserves? From the view of the insurers the payouts are random, quite like demand deposits, no fixed terms or anything. Thus the whole point of insurance is that all the insured assets are not fully backed. So if catastrophy happens they might not be able to pay everyone.
Here we go again. I thought you’ve given up the attempt to ‘explain’ FRB as if it was insurance ? Because it is not. What’s next ? You’re going to claim that FRB works because it worked (not) in Scotland ?
The whole point of insurance is to implement a sort of voluntary socialism or mutual help – which can only work to a point of course. It has nothing to do with banking.
WTF said it is insurance?
You ? “Look, is not insurance a bit like fractional reserves?”
You have noticed that it is a forum for the discussion of theory “in the tradition of the Austrian School” haven’t you?
You still haven’t answered the question, have you read anything that describes the “Austrian School theory”?
If people wanted to discuss the intricate details of monetarism or the Real Bills Doctrine this really isn’t the place for it because according to “tradition” these systems are built upon a foundation of fraud.
It doesn’t matter if it only fails in 0.0001% of all cases or if it is justifiable due to some alleged ‘objective time component’ that money supposedly possesses it is the system of fractional reserve banking that is the issue.
So unless you start addressing the issue of why the “Austrian tradition” considers this fraud, and I’m not going to hand feed you the argument either, then it doesn’t really matter what your “critical thinking” comes up with because you’re not even directly addressing the point.
Yes, I know its a bit extreme to expect someone to actually be familiar with the argument they are debating against but what can I say, I’m a bit of a traditionalist on this subject.
You speak as if the all austrians were against it, like there is not even a debate.
I hadn’t realized this forum was just supposed to be a love fest between certain so called “austrians”. What would you discuss if everyone is in complete agreement? I don’t think all followers of the Austrian school are in lock step like you suggest.
Obviously, you don’t have any rebuttal to the holes in your arguement I have presented so you just resort to “you should go read this book before we discuss the subject”. If you can’t address simple flaws in your arguement than I doubt you really understand what you are arguing.
I have read arguements on the FRB, I didn’t find them compelling. Your inability to defend it hasn’t changed my opinion.