So very well said.
Edit: At Angurse
Yes, but under anarchy it would be minimal and indeed hardly felt at all. This would be like saying: but would there be thieves under anarchy? Yes, but their activity would be minimized.
The Rothbardian 100% reserve requirement would easily be circumvented by bankers. It is utopian.
Sorry to burst your bubble but…
No, I’m sorry but the degree of loan investment for holding cash is 0. Therefore, it is not a loan. That’s why it is also called hoarding.
And I always enjoy our exchanges simply because they reveal what I think is an impressive level of economic improvising and obfuscation on your part, that you must constantly resort to in order to hold your position.
It isn’t called hoarding, hoarding is when you stuff it under your mattress as opposed to putting it into an interest-bearing account. The difference is pretty obvious.
Oh, how fun, I get the same impression from you.
Another improvised assertion: hoarding is now only when you put money under the mattress.
It’s perfectly reasonable to expect people to want to hold their money in a warehouse for for the services of safekeeping and other convenient services such as checkbook money, balance statements, etc… That’s what a demand deposit is.
so your dichotomy of holding cash with interest vs holding cash with no interest remains false.
You continue to conflate demand to hold money with investing in loans. That’s basically what it comes down to.
Improvised by you perhaps, I didn’t say such a thing. (remove the “now” and the “only”)
Sure. I haven’t said that warehousing was a loan now have I?
Not at all, interest is an extremely important distinction, as interest being paid on an account logically entails that the money is being used.
but what? Who would accept notes from a bank that engages in FRB and is at all times bankrupt?
Good, so we finally agree on something here, maybe? So a deposit in a warehouse would render a demand deposit. So you’ll agree that in this case, the bank/warehouse owner would commit a fraudulent act such as misappropriation if he lends out the money, correct?
All this is spelled out clearly in advance? If so, I may be foolish for agreeing, but it is not fraud.
See this is what I don’t get.
It seems to me in an anarchist society, FRB would fail in competition and in practice with full-reserve banks, and thus while ‘allowed’ wouldn’t be practical or successful.
Perhaps not fraud in the criminal sense, but fraud in the sense of ‘trickery’ ( @ dictionary.reference.com ) .
It’s not a matter of allowing or banning any particular system. It’s about logically valid contractual agreements and their enforcement. It’s about whether banks that engage in FRB are committing the crime of misappropriation or embezzlement [or not], under the assumption that such crimes are likely to be recognized as crimes in any free and voluntary society.
I think I see what you’re getting at. Basically, how can a bank take A amount of money, wave a magic wand, and produce B amount of money artificially? In other words, if I deposit $1,000 into a bank, how can it take $800 of that deposit, loan it out to someone else and still maintain my $1000 deposit as well. It just created $800 out of nowhere at the potential expense of my deposit.
But again, in an anarchist society, if banks let it be known that they either practice FRB or full-reserve banking, it seems like a reasonable conclusion that most people would prefer to engage in business with the latter bank as opposed to the former, no?
What would this contract look like?
You gave us 1000 dollars, we don’t have it anymore. But if you ask us, we might be able to scramble it together?
A bank deposit contract with a clause, perhaps saying something like this: the money will earn x amount of interest while it is being lent out , liquidity depends on the available pool of reserves, redemption may be deferred indefinitely, etc…
If a person with such a deposit wants to use checkbook money or banknotes or any type of fiduciary media , there should be no deliberate attempt to conceal the nature of the deposit behind the media.
Something of the above nature would certainly not be fraud. Will people accept such media as money? That’s for you to ponder upon.
If the terms and conditions spell out “warehousing” certainly, it would either be breach of contract or fraud depending on the actual intentions of the banker.
That is simply the dumbest argument for a crime that I ever seen. Next time I rob a bank, I’ll tell the judge that is was fair because the bank assumed the risk of robbery by opening the branch.
I understand that reading posts to the end is not everyone’s no.1 pastime, yet I’d advice it before attacking someone’s position. As I said in that very post:
“Imposing a 100% reserve requirement, apart from enforceability issues, would force people to chose among a liquid account with little to no interest at all, and an immobilized account with relatively high interest. What if I want a middle solution? What if clients prefer some interest rate and some liquidity? Note that a bank that engages in (limited) fractional reserve operations offers a higher interest rate on deposits, yet a lower liquidity rate due to a higher risk of default. Deposits come to resemble some sort of investment. Why would we deny the public this middle choice? Who are we to presume we know better than they?
I know most would say “as long as they put it in the contract, its fine”. But how can this be put on a contract? “I retain the right to retrieve my deposit, unless the Bank ends up with no fund, in which case I give up my claim”? Well, that is exactly what is implied while transacting with a limited liability company. Thus, legally speaking, the bank owner is within his most perfect rights when engaging in fractional reserve banking.
”
Clearer now?
Firstly, what’s wrong with that? Any contract voluntarily agreed on by both parties is fine. Think Vegas.
Secondly, how about: “I retain the right to retrieve my deposit, under all circs. I understand the bank may lend part or all of it to someone, them gambling that I won’t ask for the money, me gambling that they will have it if I need it. Should the bank run out of money, they owe it to me just the same and I don’t give up my claim.”