z1235
May 11, 2010, 8:13am
10
Chris, +1.
This case is closed, as far as I’m concerned. Selgin’s defensive demagoguery notwithstanding, the question about “Free” Banking becomes increasingly less about its legality (i.e. contract fine prints related to depositor’s awareness/acknowledgment that they “allow” for their money to be lent out while still expecting immediate liquidity) and more about relevance and/or necessity. As I said in a recent thread on the subject:
https://forum.freecapitalists.org/t/booms-and-busts-before-the-fed-era/12291/86
It still boggles my mind that a whole movement has been perpetuated TODAY around such an archaic, bizarre and completely unnecessary concept as Free Banking. If I ‘demand’ money, I can either (1) earn/make it, (2) sell something I own in return for it, or (3) borrow it from someone else who’s saved it and is willing to lend it to me at interest. With advancements in technology and finance, it is getting exponentially easier for market agents to manage their capital allocations between cash (immediate liquidity) and investments (loans, bonds, stocks, funds, etc.). As markets in an increasing number of such instruments become increasingly liquid and developed it is becoming ever easier to change the duration and nature of one’s investments (e.g. Sell a 10yr Greek bond to buy a 3month US bill, a 6 month Ford commercial paper, a share of IBM, and keep the rest in cash). If one’s too stupid to do this on their own, there are professionals that can do it for them, for a fee.
Why on Earth would anyone need a bank in this day and age, and a fractional reserve one, no less? Without central banks at the cartel’s core, banks would most likely go the way of the Dodo, as new entities appear to match the preferred duration, nature, and risk profile of REAL savings with the economy (business) that seeks them.
Z.