I was being sarcastic.
True there are no official banks but there are other options:
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The old fashioned rent, save (In gold or silver), pay cash by converting gold and silver to FRNs.
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FInd an outlaw (Unfortunately, a banker dealing in specie is outside the law although they have harmed no one.) banker dealing in gold or silver and take the loan from them.
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The even older pre-banking system method of renting to own.
This was kinda lost. Since working against the current system in this way is most honourable.
Well if you can do it without getting caught, otherwise it is just stupid.
“Given that fractional reserve banks do not lend their own capital but inflate the money supply to expropriate capital …”
ok…someone stated they believe fractional reserve banks exist. ill take their word for it for now.
if they do, and if i understand their operation (from what posters have said at these sites) correctly, if the bannks lend out capital and replace the capital with another sort of capital (bank credit) to the depositor arent they allowing they allowing the depositor to expropriate capital as well by extending credit?
“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.”
if the original claimants are getting bank credit equivalent to the “money?” that the bank loans out are they left out in the cold?
thier newly received credit spends just like the money., right?
and is it at great cost to society if the deposits are insured (i guess through an inflationary mechanism) if near costless paper or whatever takes place to insure smooth(er) functioning of money exchanges…to keep the system from collapsing, iow?
would (gold/silver) deposits being deposits and loans being loans create a safer (or similar) outcome to the govt contraption?
“Yeah. And the contract most certainly isn’t valid.”
my deposit agreement says nothing about demand deposit and doesnt eve use the term, for my checking account that is. i am pretty sure it doesnt say that the money i deposit is loaned out either.
it does seem that the only thing the govt should really be concerned with in this area is rights enforcement according to contracts and not the issuer of the paper money/currency itself.
The fault the bank does is this: IOU = money. It is not, handing out IOUs and calling them money is fraudulent and wrong.
If they said “We can probably redeem this IOU whenever you want, but there are these and this restrictions” that would be fine but that is not what a demand deposit is. Current accounts with banks today are contractually in the form of demand deposits. There a few restrictions like the right of the bank to refuse service when it isn’t open or during war … but essentially the promise they make is simply that they will store your money for you, then they go lend it to someone else.
So then you have two people believing that they booth own all the money and acting in the economy as if they booth had all the money. Which creates more demand then there actually is and everything goes to hell. If they had done this properly with IOUs instead the market would compensate and IOUs would be traded at a slight discount to money because they aren’t actually quite as liquid.
It would create business cycles whenever it needs to be used for either intended or unintended purposes.
The biggest problems however are that government would abuse such power and secondly that it completely removes all incentives for sound banking.
Why should the banks care if they can cover there obligations to there customers when deposits are insured by government? The customers won’t care if the bank can pay them or not because either way they can get there money from government.
“my deposit agreement says nothing about demand deposit and doesnt eve use the term, for my checking account that is. i am pretty sure it doesnt say that the money i deposit is loaned out either.”
are there any more demand deposits?? enough to create the nationwide cycles that you mention?
All types of transaction accounts are demand deposits. What the banks choose to call them is irrelevant. It is how they work that is important and they are all a promise of money on demand with no other restrictions then you would expect from a warehouse holding your stuff.
IOUs are money. The end.
“All types of transaction accounts are demand deposits. What the banks choose to call them is irrelevant.”
well from other mises readings i have looked over the speed of demand was rather important under contract terms.
if the current deposit accounts dont say ‘on demand’ then it doesnt seem like a demand deposit and could still be a transaction account - which seems relevant.
if i wrote a check to a merchant and the bank had to sell an asset to get the cash to meet the check claim it would seem that demand would be met once a bank asset is sold…part of a check writing contract but it would still be a transaction account, right?
having govt equate paper currency and claims to paper currency (if that is what takes place) may certainly make the commercial bank contract not mean as much as a warehouse storage contract.
i dont believe the iou to be money though…it seems that it doesnt have the final tender status that a money would have. the current deposit insurance scheme/fed regulator system probobly means that bank credit really isnt an iouin the way that s giving a hamburger for payment on tuesday would be.
No, the closest an IOU can come to being money is to be fiat money. Which isn’t real money.
Real money is a commodity used as means of exchange. An IOU is near-money, bank money or if the debt and liquidity is enforced by government: fiat money .
It is, which is why most savings accounts today are also demand deposits.
If the bank makes restrictions in the deposit contract that gives it time to sell assets and make sure to keep enough of those assets to meet it’s obligations to all it’s clients, then it is no longer FRB and no longer fraudulent.
If it still will have similar effects on the economy as a whole that FRB has is a much more difficult riddle.
It seems to me that even with proper contractual restrictions (not to be fraudulent) bank money from a very well maintained banking system could trade at so close value to real money that it basically becomes the same thing anyway, because the trust in the banking system is so high. On demand credits and insurance also seems to have FRB-like effects on the money supply.
This is pretty difficult stuff and I need to educate myself more before going into it in much detail, but it seems these effects would be a lot less volatile then a FRB-system. Which is just completely unrestricted creation of bank money, also completely without trust in banks being an issue in the markets valuation of the bank money. Also without government in the picture there is little reason why the amount of extra credit created by things like people having insurance so they can keep less reserve cash would ever change. Except if the trust in the system changes, but since non-fraudulent bank money would be valued according to trust it should compensate by immediately re-evaluating the bank money across the entire economy in a non-inflationary way. I think am just guessing here now…
"if the current deposit accounts dont say ‘on demand’ then it doesnt seem like a demand deposit and could still be a transaction account - which seems relevant.
“having govt equate paper currency and claims to paper currency (if that is what takes place) may certainly make the commercial bank contract not mean as much as a warehouse storage contract.”
i dont see the govt currency system as fraud (if i ahve correctly described what takes place?) if you are talking about more claims to paper than there actually is paper. with the mechanisms that are in place now having more claims to paper than there actually is paper isnt so much fraud as it is a govt operated currency system…with additional paper in a near standby mode to meet any type of paper run…if that is what you mean. again, my deposit agreement(checking account) with the bank i am at says nothing about about a demand deposit. i think they use the term funds. and i dont know that total amount of paper cash they would have on hand if most of their depositors asked for it…i dont see why they would necessarily.
i dont see the fraud..if i have described the current bank/fed process correctly .
"All types of transaction accounts are demand deposits. What the banks choose to call them is irrelevant…
“If the bank makes restrictions in the deposit contract that gives it time to sell assets and make sure to keep enough of those assets to meet it’s obligations to all it’s clients, then it is no longer FRB and no longer fraudulent.”
sounds like a transaction account to me.
do banks currently use demand deposit in the deposit agreements…mine doesnt.
are their millions of accounts that do?? the better part of m1???
"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."
this doesnt make much sense at all. i guess you are asking a question. pay what rent?? what theft??
are you saying depositors have no clue as to their deposit agreements?? do you yourself have a deposit account??
does the bank truly lend out paper and replace it with a credit???
if so it sounds like the bank will over time get some interest return and the depositor gets credit to expropriate goods without giving up any spending power. unless teh additional credit pushes prices up in loeague with te new credit.
Money=medium of exchange.
iou=???
does money in anyway constitute a final payment? a completion of exchange?? does the iou not meet this requiremnt in some way?
If enough people did as you were suggesting, Stranger, the gov’t/Fed might chose to do away with FDIC rather than create the massive amount of new money necessary to prevent system wide bank failures. Without the FDIC, you wouldn’t be defrauding the “public”, but rather a portion of the customers of the bank you got your loan from. You might not be able to point out exactly who, but that still wouldn’t take away from the fact that many people would lose their savings or a portion of their savings b/c of your actions.
And it’s obvious that the people who benefit the most from FRB are the banks and those who take out much more in loans than they have in savings, as the bank earns interest off of something they bring into existence, and the companies or individuals borrowing the money get to spend it before the inevitable rise in prices as the new money enters the economy.
Unless you have a ton of savings and take a small loan, you obviously would benefit much more from taking out a loan and not paying it back than you are hurt by the current system through the loss of value in your savings.
There are many dictionary definitions of money. In this context yours is pointless and devoids the word of meaning.
Money has to be a commodity. A transference or issue of debt is a whole different kind of transaction then a commodity payment.
I could say commodity money every time I speak of money, but deluding the word like this only serves central bankers. So I won’t. Money is commodity money, when I mean something else I will say bank money, fiat money (except in obvious cases I might leave out fiat), IOU, near-money or whatever…