Given that fractional reserve banks do not lend their own capital but inflate the money supply to expropriate capital and lend it in return for a rent on this loan, is there a moral obligation to pay this rent? To do so rewards the bank’s expropriation and theft.
This has severe implications for any kind of revolutionary strategy. Simply put, it would mean that a freedom party would be obliged to forgive the debts incurred by people due to the banking system’s inflation, particularly the state’s debts.
YES!!! A loan is a contract between the borrower to pay money now and the lender to receive money + interest in the future. This contract is valid even if the lender stole the money which is indirectly what happened. So it is a moral obligation of the borrower to pay back the loan + interest, but the mechanism of how the lender acquired the money is of importance as other claimants could show up demanding return of the stolen money and is also important when setting interest rates. Of course the claimants would have a moral (NOT CURRENTLY LEGAL) claim to borrowers property as they never agreed to enter into the contract and the money was stolen from them. But the government through force and with great cost to society hoses up the moral arrangements between the rightful owners of the money thus leaving the claimants (Original Depositors) out in the cold. Then the government turns around at even greater cost to society and insures their deposits.
I don’t see how that follows. If the borrower must return the money to the original owners, and the original owners are just generally everyone in the economy, that includes the borrower, thus by defaulting on the loan the borrower is simply taking his money back.
Because you forget that the borrowed funds are spent. They become liabilities to all those recipients of the borrowed funds. This is why the bank is inherently bankrupt. The bust reveals that the real assets are just a fraction of the total liabilities.
Of course the funds are spent. But the fact is that the borrower was expropriated himself by the bank when it makes the loan, so what he is spending is what ought to be his own funds.
Fractional reserve banking is an expropriation of all capital savers in favor of the bank. This means that in order to remain competitive in the face of one’s capital being expropriated by the banks, one is forced to take bank loans. This means that if the bank is guilty of stealing your savings, you can’t be guilty of not paying the bank back on its loan, since it is only your own savings that you repossessed.
You’re using the counterfeiter analogy. Fine, but I think it’s only fair to distinguish between the 1st recipients of the new money and the rest of the public.
Well it can’t really be determined who the rest of the public is, except that we know that the recipient is part of that public in some way.
Anyway the point is the outcome. If fractional reserve loans are no longer honored, then banks can no longer make them. Fractional reserve banking must collapse.
The original owners are specific depositors with very specific claims on their money stored by the banking institution making the loan so we know the people who may have claims on the money loaned to the borrower. Without the force of government, there would be quite a few cases of depositors suing bankers for personal assets as the banks do not have the cash to pay the depositors.
Back to the contract being valid. The situation between the borrower and lender is exactly the same as the situation between the borrower/buyer and the seller. The borrower buys the liability. If the borrower buys the home and there is a 50 year old lein on the property then who is responsible for that lein? It is the borrower because the claim is not on the borrower but on the property. Similarly if the banker lends money and there is a claim on it then it is on the borrower first as the claim is on the property (The borrower may be able to sue the banker later). The lender has significantly more information about where they got the money than the borrower. Now there is insurance paid by the lender to the FDIC that is reflected in the interest rate. This is similar to the insurance paid by the borrower/buyer on the title to the property.
Under current law, the bankers are shielded from their over loaning of money bye the Federal Government. Without this shield, borrowers and depositors would have to be much more careful about who they bank with and interest rates would reflect this greater risk.
Fractional reserve demand deposits are fraud by definition.
You don’t have any moral obligation to follow thru on contracts you have made with criminal organisations so the answer is no.
Bank creates money. Borrower is 1st recipient. What cannot be determined about that?
You asked about the moral obligation of the borrower. Yes, it is very honorable for you to accept this new money, spend it, and then say you don’t want to pay back because it was extracted out of the public. Very considerate and gracious of you. The public is in your debt.
Sure, but currently there are no free banks making loans from their own mints. There are banks making loans in Federal Reserve notes, and people trying to save up in Federal Reserve notes but being expropriated by the banks, only to have to take a loan in order to compete with other borrowers. Are we to condemn these people to bondage?
Yeah. And the contract most certainly isn’t valid.
The fact that the money you lent belong to someone else in no way implies that the you should follow thru with the contract and return the money to the thief.
No it isn’t honourable. If anything it makes you an accomplice to the crime.
It is not just new money, there is a fraudulent transaction of value involved. Theft. If you know that I am in the business of mugging people and still let me buy stuff you with stolen money are you helping me to live of thievery. You aren’t necessary an accomplice but is is highly immoral and taking stolen property in itself is a crime. What is it called? In this case if you spend money you know is counter-fit you are frauding everyone you try to pay with them.
This only applies if we have single fraudulent bank in a otherwise sound system. With the entire system corrupt it of course becomes impossible to place guilt on the clients in this way. Even if you know what is going on you don’t really have a choice in the matter of using banks. Also it could be argued that there are no victims since everyone participate knowingly in the system. Or that everyone are victims of the people enforcing the system depending on how you look at it.
In the current system this could be a honourable act, but it doesn’t really follow from your argument that what is intend as honourable is abusing and stealing from the corrupt system rather then just a specific fraudulent bank.