How can one be a Chicago-school advocate and "anarcho"-Capitalist?

[scineram]

Because Austrianism has no monopoly on craziness.

[mahall]

David Friedman or to whom it may concern,

1. As someone already said, the schools of thought are defined, insofar as they can be defined, by methodology. If you define them by conclusions, you might have problems with Mises’ support for the draft and state subsidy of opera.

I only started Human Action no more than two weeks ago, heh. I should probably spend more time learning there then here! But, my mind wanders to the computer too often.

Do you reject praxeology and favor induction over deduction? With the methodology of the Chicago School, do you see it capable of verifying cause and effect in an economy?

2. I don’t know what you think “monetarism” is. The quantity theory of money and its implications apply to commodity money, fractional reserve money, fiat money, any other monetary system you can think of. As it happens, my father wrote an essay on the optimum quantity of money and I pointed out that the behavior of the quantity which he argued was optimal was what would be produced by a system of competing private issuers.

I am nothing more than an amateur and I appreciate the response. My inclination towards monetarism was, that an economist which held monetarist beliefs had a non-Austrian view of business cycles. By reading your point here it seems to mean that monetarism is a larger umbrella. The monetarist has more than one path to run, you might say.

3. There is no inconsistency between fractional reserve money and anarchy–and the lower the fraction, the closer fractional reserve money comes to fiat money. On the historical evidence, fractional reserve money, not commodity money, is what free market banking produces.

Once again, I’m an amateur, but I’ll stick my head out again at the risk of getting chopped off, heh.

I disagree, that is if I am reading you right. You believe that fractional reserve banking is nonfraudulent? How can a free market bank keep nonfraudulent contracts with all it’s depositors that they can have their cash on demand while holding only a fraction of it’s reserves? I believe the hypothetical free market would have full reserve banks (vaults) and if you want to earn interest you can deposit into equity.

Anyone feel free to critique.

[cobracarg]

I disagree, that is if I am reading you right. You believe that fractional reserve banking is nonfraudulent? How can a free market bank keep nonfraudulent contracts with all it’s depositors that they can have their cash on demand while holding only a fraction of it’s reserves? I believe the hypothetical free market would have full reserve banks (vaults) and if you want to earn interest you can deposit into equity.

I would recommend reading “Denationalisation of Money” by F.A Hayek where he writes how a fractional reserve banking system may occur in a free market… Austrian Economics isn’t necessarily anti-fractional reserve.

[mahall]

I would recommend reading “Denationalisation of Money” by F.A Hayek where he writes how a fractional reserve banking system may occur in a free market… Austrian Economics isn’t necessarily anti-fractional reserve.

Thank you for the recommendation. I don’t think I can dive into that now, I have other ventures I’m currently pursuing.

Mr. Friedman proposes that free market banking is fractional reserve banking in an appeal to history. I see the free market equivalent to the ‘services’ provided by fractional reserve banking as two fold: lending & borrowing without the contract of cash-on-demand and then full-reserve banks with the contract of cash-on-demand (vaults). Fractional reserve banking is a combination and ultimately is fraud, in that it is a lending/borrowing establishment WITH a contract for cash-on-demand.