what are you referring to that we have cleared up the matter about it not being a demand deposit?
Bank of America has already told their customers that the relationship is a loan and yet there is not a line of people leaving BOA as result of this. The facts seem contrary to your opinion.
Yes, having changed a few words in the contract we have ended the entire FRB arguement.
From a business perspective it is quite simple. By loaning out some of the money my Bank makes more money than your 100% reserve bank so I can offer things like free checking or less ATM charges or give away free toasters. People will change from your bank to mine because I can offer more services for less and I will still be able to compete with time-deposit banks aon an equal footing because I can have a section of the bank devoted just to that. So I am more competitive than 100% reserve banks with some customers and equally competitive with Timed deposit banks.
Well not in the case of Bank Of America and if I started the bank new then that there would be no change.
I thought we were discussing banking in a free society. Typical Austrian cult nonsense, unable to defend your position you begin discussing the state again.
Having changed the contract that clearly makes the arrangement a loan then it is no longer a demand deposit.
oh so, now you are as cultish as we are. progress indeed.
Promising to pay somebody back when you know it is impossible does though.
Oh Max, YOU claimed that banking in a free society won’t be any different from banking now. Do you remeber you said that ? Here :
Now, the current system is in a sorry state ? Do you acknowledge that ? Do you understand what’s wrong with the current system ? I’m afraid not…
And you’re saying that the banking system in a free society will be no different ? I don’t see what the point of a free society is, then. Well, except that in a free society there will be no bail outs, so there would be no baking system either (if the banking system is to operate according to your ‘non-austrian’ principles, that is).
You’d never guess what, I agree with you.
Yet, “Daijobu - we do it all the time!”
But do you see how changing the contract slightly isn’t going to affect the actual operation of the bank. So the Austrian position uproar over the contract language and what changes will actually take place in the market is much ado about nothing. Just like Bank of America has changed the language in the contract but their operations are exactly the same.
This issue has already been resolved with a change in the contract but the banks will operate exactly as before.
The people in the banks don’t believe they have instant access to the money. It is a time deposit.
And that is exactly right, there will be no functional difference. Functional difference means the actual operations will be the same having cleared up the contract formalities. So how much money the bank has on reserves won’t change, they will still loan money, people will still request money, all the same.
I don’t think the current system is in a sorry state because the language in some bank contracts is incorrect. You are confusing the issues. On one hand you have state interference on a variety of levels and on the other you have a minor contract change which will have no effect on how banks are functioning.
With regard to the changes in the contract which are at the heart of your arguement, there will be no fucntional difference in banks in a free society as a result of that.
I can see that you now realize how weak your fixation with changing the contract is so you now begin discussing unrelated topics. Did I say anything about bailouts in free banking? Nor have I suggested anything even dramatically un-Austrian other than to point out that changing the language in the contract doesn’t have any impact on banking which is contrarian to what most Austrians think which is that changing the contract will radically transform the banking industry. The facts as they exist now demonstrate otherwise. Finally, you can not prove that banking as I suggest it will exist is inherently insolvent. You have no evidence that proves your claim.
No, people will still believe they have instant access to the money. Austrians have a very difficult time dealing with probability. People can expect that they will have instant access to the money and also understand that there is a small probability they will not. The difference between us is that I am willing to let people freely make that decision and many Austrians are not.
This, for the umpteenth time is not the same thing. If people believe they have instant access to the money it is because they don’t understand what is happening. And I doubt any Austrian would have a problem with your bank if it could survive, they only are (rightfully) calling it a time deposit and not FRB.
hi max, if it please you i am happy to concede that your form of banks (Perhaps Deposits) sohuld be able to compete with other traditional account suppliers (Demand and Time), so long as they are explicit and correctly formulate their contract to be honest. given that, has our dispute come to an end? is this the end of the thread?!?!
(oh, and current FRB is fraud and evil)
Yes this is the end.
To begin with, changes in contract wording are not at the heart of my argument.
You don’t understand what FRB is. You use your own personal definition for FRB. You don’t understand what’s going on in the current system.
On the other hand, the system you propose, which according to you is what will be used in a free society (despite being just your personal creation) is flawed and you don’t understand where the flaw lies.
Finally, criticism of FRB is way older than the so called austrian school. Just one more fact that shows that your grasp of the subject is feeble. At least you should regard all advocates of hard money as ‘cultish’.
I tried to show that the system you adcvocate (which is no different than the current one) is doomed to failure. Too bad you don’t get it.
The facts as they exist now illustrate the unsoundness of FRB.
What I can’t do is make you understand something you are unable to understand. It’s not my fault anyway…
Agreeing to something upfront does not make it right. If I sign a contract to buy anything you steal is this a valid contract. If the money supply increases you are going to have inflation. This doesn’t just mean actual paper money in circulation it also refers to money in our accounts. If you agree to enter into this contract with a bank it may be worth while because you get better return than you lose in inflation but what about the people who do not do business with this bank or any bank for that matter. Their rights are being violated by debasing the currency they hold
No, the difference is that we understand the difference between a time deposit and a demand deposit, whereas you do not.