Yes, that’s basically what I meant. However, I’d consider “pending supply” to implicitly mean that, when supply is present, the redemption is “on demand”. Of course, if you take “on demand” to only have an absolute meaning, then “pending supply” isn’t “on demand” at all.
I think JH2011 did accept your conclusion at the very beginning. You asked him if he sees a difference between “on demand, pending supply” and “pending supply”. He replied that he basically does not, although he added that he sees “pending supply” as begging the question as to when redemption can occur in the presence of supply. While I see no reason to see any such question-begging there, you didn’t focus on that. Instead you tried constructing a general, logical proof that “on demand, pending supply” cannot equal “pending supply”. As at least one other poster has pointed out, however, natural language doesn’t necessarily operate in a rigorously logical manner.
Let me first get the claim-attribution-thing out of the way, since it is all based on a misunderstanding. I did not attribute to you the claim that “on demand, pending supply”=“pending supply”. I only commented on your analysis of it. Anyway, not really important, so let’s move on.
I notice you do not make an attempt to create something suitable for logical deduction, so I conclude you are indeed more interested in semantics. If you do want to go into a logical analysis, then you’re very welcome, and I’ll be happy to contribute.
First: “when such a claim is presented” is the same thing as “when requested”.
Second: the difference between your interpretation and mine, is that you don’t take “when such a claim is brought forward” as a qualifier to “any time”. I do, so if I would be to use apostrophs like you did, it would be: “any time when such a claim is brought forward”. I maintain that my interpretation is to be preferred and is in fact the most common one, but I see no problem in analyzing both.
I’ll start with your interpretation. This seems to be that “on demand” simply means: “any time”. (Correct me if this is not your interpretation). Taken together with redemption, this means that redemption would take place any time; both when requested and when not requested. This may sound a bit strange, especially the “when not requested”-part, but it actually has a sensible meaning: one can argue it describes a warehouse.
I’ll continue with my own interpretation: “any time when such a claim is brought forward”. To this you respond:
So regarding whether this would constitute fraud you now agree with op Kaz that it wouldn’t, and that even without his qualifier “depending supply”.
Unfortunately, you now switch the semantics debate to a different term:
and for this, I can only give credits to Zangelbert Bingledack for prescience.
So when the TV set you want is in stock, you can take your wallet out and demand it? Now why am I not convinced that this is why this thread has 200 posts.
Not at all. I know what is typically meant by “on demand” or even just “demand”, however, for the sake of argument, I let them define “on demand” anyway they like, but then simply insist that they apply it consistently.
The logical proof was to test the consistency of this new interpretation of “on demand”. Not to show how language can be used or not. You missed the point also. IF JH and the other poster want to insist that they are fine with the silly conclusion of “not on demand”=“not pending supply” then I won’t argue any longer for I would have accomplished my goal. By the fact is they do not accept this conclusion. The want to redefine “on demand” each time differently. Well then, it becomes impossible to apply any form of logical deductive analysis if one insists that “natural language” allows him redefine terms as he pleases in order to avoid absurd conclusions.
To be blunt, it’s cryptic/esoteric questions like these which only get people more confused. Many posts are subsequently wasted trying to figure out what you really meant. So this kind of stuff doesn’t advance the discussion whatsoever, IMO.
Now let me see if I can answer your question “correctly”. Yes, when a TV set I want is in stock, I believe I can take out my wallet and “demand” (i.e. indicate willingness to purchase) it.
Okay, where do you see anyone using “on demand” or “demand” inconsistently?
Sorry, by “conclusion” I thought you were talking about “there is no difference between ‘on demand, pending supply’ and just ‘pending supply’”.
If you’re concerned with people getting your points, you’ll (try to) explain them to people in terms they can understand. I think it’s unwise to demand (no pun intended) that they be able to read your mind.
“demand” already implies exchange. “demand” is not a want or a simple verbal request. “on demand” means you better be ready to make the exchange at “any time” when such a claim is brought forward.
That’s the second time you misquote me now. You’re a dishonest Jerk!
Perhaps you and Mr. Zangelbert feel I owe you something. No, you don’t need prescience to know that oranges are not apples. If you were not lazy and dishonest debaters, you would see that I have addressed this issue, and perhaps peruse it further or ask for elaboration, rather then make dumb trollish remarks.
Hm, you are right I misquoted you, I’m sorry for that. In my defense, it’s quite clear it’s an honest mistake. First, if I really would have wanted to deliberately misquote you, then I probably wouldn’t have left a smoking gun by quoting you correctly directly before. Second, the meaning hasn’t actually changed at all, so you might have focused on that instead of on some silly misquoting on my part.
I’m not sure where you see a second case of misquoting; if you insist there exists one then let me know where and I’ll correct it. (Granted that it’s correct ofcourse).
Don’t worry, I don’t feel like you owe me anything. Well, except maybe common courtesy, but I’ll leave that up to your own judgment.
My initial response to you was triggered by your use of logical deduction. This is indeed something that sometimes can be quite useful, provided it’s done correctly. Since I supported your general idea of using logic, but felt you could use some assistence with the analysis, I tried to provide that to you. I’m now not sure what your thoughts are regarding the use of logic. You haven’t followed up on the analysis regarding “redemption” and “on demand”, which suggests you are not interested. On the other hand, you now again bring up your point of “not on demand”=“not pending supply”, and this suggests you are in fact interested.
In any case, I don’t know if it was directed at me, but I do not accept that conclusion, and I’ve given you my reasons in my first post. If you like I can elaborate.
On a more constructive note, it may be useful to pinpoint exactly what the semantical differences are that lead to disagreement. That “on demand” thing seems to be one of them. So suppose we have FRB and:
make clear it is on demand, in the sense that whatever can be claimed is not actually always there, and that the intention is only to redeem claims as they come in.
throw in the “pending supply” clause for extra clarity
do not call the institution that performs the activity a bank
Would that be enough for you to consider it a legitimate activity, or would there still be things you object to?
For shame…in order for your claim to be correct, the “opposition” would have to either be too easily confused by the secondary point even though it doesn’t really share an interface with the original point, or they’d have to be intellectually dishonest and just defending their position dogmatically, grasping at a diversion.
We should graciously assume they’re completely honest and wise.
But yes, somehow, despite a completely dearth of any rational means of refuting my original point, there does seem to be a lot of confusion going on in other ways, the original point being obscured at every turn.
I suppose I should write another post about private lenders of the last resort and deposit insurance, and even a third about how the bank is selling certificates in return for gold, and nobody’s magically owning the original gold twice.
These are the three central fallacies, and the Faithful do appear, somehow, to rapidly rotate between them, thereby evading any honest examination of the truth: That there is no fraud, or other cause for a socialist prohibition, at all.
So three separate posts, and then the demand that each stick only to the precise issue at hand, would solve the problem.
Conversely, we could break apart each of our responses into three parts, and reiterate the clarification and demand for an addressing of each, Since this post has turned into pointless navel-staring because of the Rothbardian evasions, perhaps I’ll just write a new thread that breaks down the issue into three categories, demanding each be addressed separately, to come to a Fractional Reserve Banking’s Legality whole.
This has been a long thread, and I hope that I’m not too late. I just joined to make this post! I read about the first 4 pages and things got repetitive so I decide to try to summarize. Basically it looks like we’ve come to a split where there are a couple different contractual scenarios that need sorting out. It depends upon what everyone thinks is the proper response each of these. Don’t answer what you think would happen in today’s courts, tell me what you think should be done..
I sign a contract to give Luke the $1 bill in my pocket when he brings me a hotdog. I will reserve this $1 for that contract for as long as he still holds the contract.
In the case of a morgage, I have every intention to fulfill it. If I lose my job I might be unable to fulfill it. I knew this ahead of time.
I sign a contract that I will give John the title to the White House if he washes my car. I know at the time that I make this contract that there is no chance that I can fulfill it.
I sign a contract that I will give Bob that I will pay him $10,000,000 next month to wash my car today. My assumption is that I’m going to win the PowerBall this weekend. I intend to fulfill the contract and I might be able to, but I know at the time of writing it that I may not be able to.
I sign a contract with Ed that I will give him my Porsche if he buys me a beer. Then I sign the same contract with Greg. I knew at the time of signing that I can fulfill either contract at any time, but I cannot fulfill both contracts.
So how would we rule on each of these cases?
Current and future fulfillment ability is certain.
Currenetly able to fulfill the terms, but the fulfillment ability of future terms are known.
There is no chance it can be fulfilled.
There is a chance it can be fulfilled, but most likely cannot.
2 conflciting contracts. Either 1 can be fulfilled but not both. This is known at the time of signing.
So what we are looking at here is whether entering into contracts with the knowledge that they may be unfulfillable should be penalized or not. And to what extent is there sufficient prior knowledge of failure to fulfill the terms? I know that I can’t pay my mortgage if I lose my job or my ability to work. Should that disqualify me from obtaining one?
Or should there only be penalty when a contract participant can show that their contract has actually been unfulfilled?
We really need to define what we think is proper contract law.
Hey Tom, no I don’t think you’re too late. Kaz hasn’t been here in a while, but we shouldn’t let that keep us from continuing the discussion.
Here’s what I think should be done in each situation:
Nothing should be done here, as no fraud is being committed.
A mortgage includes the house as collateral, so if you default on it, the bank can take ownership of the house. But I wouldn’t say that defaulting on a mortgage is necessarily a case of fraud.
You don’t own the White House, so this is necessarily fraudulent.
Technically, you owe Bob that $10 million whether you win the PowerBall or not. He could compel you to work off that debt if he wants to.
Both of these contracts, taken together, are fraudulent. I take them together because they both involve claims the same scarce resource.
I want to ask about your responses to 3, 4, 5. Number 4 was about a monetary payment. It’s an unsecured debt since I don’t have the money right now and there is no colleteral. You anwered that the contract is valid.
Let’s change the terms of #3 from the White House to a Les Paul guitar. I don’t own a Les Paul, but I might be able to get one. What would you say about that contract?
And for #5 - What if I was able to buy a 2nd identical car, wouldn’t that fulfill the contract (I take it your assumption was that the contract refers to a particular item, of which there is only 1, instead of the type of item, of which there are many identical items.)
What I’m trying to get at here is whether the legitimacy of a contract can be determined at the time of signature, or if legal actions can only be taken once a contract is breached. Just beacuse it doesn’t seem likely that a contract can be fulfilled, does that make it fraudulent? Where would the line be drawn?
In my mind the question of fractional reserve banking can easily be reduced to that of private property. We can acknowledge that ownership of private property can only be undertaken by individuals, that collective ownership cannot exist in any real sense. Sure, individuals can own a share of property, but they still only own a share of that property, which is not collective ownership. The problem encountered in fractional reserve banking is that a sum of money owned by one party is then loaned to another party. While it is true that the second party does not own that money (he has borrowed it), it is also true that the same money in question will eventually be owned by a third party, who does not have any liabilities tied to that money. So, the essential problem of fractional reserve banking is that a sum of money is claimed by two parties, each claiming 100% ownership of the same good (the money). Neither party is apprised of this change of ownership, nor are they aware of who the other full owner of such good is. That the bank in question undertakes this arbitrary granting of ownership to another party, and that this is done to increase the amount of loans from which to collect interest, is what constitutes the fractional reserve process as fraudulent.
The fact that this is done in the arena of money often gives rise to faulty conclusions. If you were to simply discuss the dynamic above in terms of goods (cars, furniture, houses, shoes, food, etc) then it is easily seen where the fraud lies. After all, money is merely a good.
Not really. The reason being is that I was speaking of tangible goods which can be exchanged or owned. Intangible goods (services) such as insurance cannot be owned, but can be exchanged (only the labor can be owned by the individual providing the service). Insurance is merely a promise to a service in the future in exchange for tangible goods (money) today. There really isn’t any way that I can think of in which you can compare the two at par with each other.
While money can most certainly be owned and exchanged as a tangible good, intangible goods can only be exchanged. With regard to insurance, money is exchanged for a promised service in the future, and such service is usually outlined in a contract. The entire idea behind the contract is that party A pays party B a particular amount of money in exchange for defined services rendered in the future (usually, the payout of some sum of money). However, the money that party A pays to party B is no longer owned by party A, rather it is now owned by party B. Also, the future rendering of services that party B may or may not be liable to provide to party A are well-defined, and are usually quite narrow. At no point does party A have any ownership of either the funds given to party B, or the services promised by party B. The only point at which party A has any claim is when party B renders its services, or if party B breaches its contract. If party B breaches its contract, then the only claim to anything that party A has is the claim to the services originally promised by party B as per the contract (i.e. it has no claim to party Bs assets, or to the original funds paid to party B). If party B cannot render such services or refuses to do so, then party A only has claim to the market value of such services, not the original funds exchanged for such services. In other words, if an insurance provider breaches the contract, the insured cannot then demand repayment of all past premiums, he can only demand payment of the market value of the services promised. This is very similar to the dynamic found in rental contracts. If the landlord breaches the contract two years in, the renter does not then have claim to all past rental payments, he only has claim to the market value of the services not rendered (e.g. one months rent, and freedom from contract).
Banking is entirely different in that all funds deposited into a demand account are owned outright by the depositor (the bank has no ownership of demand deposit funds). This 100% ownership by the depositor is then arbitrarily granted by the bank to another coinciding party. Now, two entities each have 100% ownership of a particular supply of tangible goods, each with no knowledge of such, which is not only fraudulent, but defies logic with regard to private property. Comparing insurance to banking isn’t a good comparison, because it is assumed that the funds deposited into a demand account are the property of the depositor (though, the bank fraudulently transfers ownership to another party), whereas with insurance the insured has no ownership or claim to the premiums paid in exchange for the promise of future services (they only have a legal claim to the services promised, or the market value thereof). Also, insurance companies cannot inflate the supply of money through the use of fractional reserves as can banking institutions. Rather, they deal on an asset basis (they can only pay out what they actually hold as assets). It’s a totally different dynamic.
If the money deposited in the bank is the property of the depositor, shouldn’t I receive the exact same pieces of paper that I deposited in the first place? Couldn’t I sue the bank if they gave me a different $20 bill than the particular one I gave them?
I do not think that you will get too far with that for two reasons: First, all $20 bills are homogeneous. Each bill is exactly the same as any other. Second, it is clear that the government allowed the banks to suspend payment to depositors in the past. Considering that, I don’t think that you’ll get any traction trying to claim that the bank gave you a different $20 bill than you deposited.
I do see your point, and I agree somewhat. The reason that I agree to a degree is that a bank is merely a service to warehouse money with regard to demand deposits. If you warehoused a Ferrari, and then a year later submitted your receipt to the warehouse for your car and they give you a Yugo, that is obvious fraud/theft. However, dollars are completely homogenous. A $20 bill serves the exact same purpose, and is just as useful in exchange as 20 $1 bills. It is very similar to the warehousing of commodities. If you purchase 100 tons of wheat and then put it into a warehouse, it is almost a surety that the wheat that you claim later will not be the same exact wheat that you warehoused. However, since wheat is entirely homogeneous, each grain of wheat is just the same as any other.
Banks do something entirely different than a warehouse. They transfer 100% ownership to be shared by two parties. In doing this, they effectively increase the supply of money merely by issuing a loan. This process reduces the value of each unit of money that you hold in your demand deposit account (as well as any cash balances that you hold). So, not only does the bank fraudulently transfer ownership of your funds, they also dilute the value of your property by increasing its supply. So, in theory, what you get back is an entirely different good, one that has been changed not merely by the market itself, but by the deliberate debasement by the banking system through the fractional reserve process. However, considering the history of governments and currency debasement, I don’t see you getting a case very far in the US court system.
While I enjoyed your posts, I disagree with your ideas about shared ownership of deposits. I believe it is more an issue of our different ideas about who owns the money when a deposit is made.
From my POV, when you deposit cash at a bank, the money is no longer yours. You own a demand deposit, the bank owns your money. That’s why the bank records the transaction as a simultaneous increase in assets and liabilities. Because of this, the bank is basically free to do with the money as they please, provided that they can comply with the obligations of the demand deposit. If FDIC insurance was legit, then this wouldn’t be much of an issue.
It’s no different than when you borrow money from the bank. The borrowed cash is yours, and the bank owns a receivable. Your assets increase at the same time as your liabilities. If you take the borrowed cash and loan it to someone else, then you aren’t increasing the money supply any more than the bank is. You aren’t creating any shared ownership, either. As long as you can fulfill the obligations of your promissory note, then you are free to do with the borrowed cash as you please.
That being said, I disagree with the current state of banking (with fraudulent FDIC insurance, Fed overreach, etc), but I do not believe that fractional reserve banking in and of itself is a violation of property rights.
You might not want it to be a loan, but it is in fact a loan. When you make a deposit, you become a creditor, and the bank becomes a debtor, for the amount deposited. A creditor-debtor relationship is established between you and the bank.
