Anytime during business hours. So what?
How exactly is it “socialist nonsense”? For example, are you saying that a restaurant has to explicitly guarantee that none of its food is poisoned? Or, if a person is apparently choking to death, one has to get his permission before performing the Heimlich Maneuver?
You seem to have misunderstood what mrokl wrote. What he meant was that keeping a fraction of the money deposited is a way for the bank to (try to) claim limited liability. Indeed, this seems to be the origin of the modern concept of “bankruptcy” – by declaring oneself as “bankrupt”, one’s creditors are left holding the bag.
Besides, simply calling something “nonsense” and/or “too socialist to even humor” in no way amounts to a logical counter-argument.
Name-calling doesn’t help your position one bit. If your actual intention is to simply (try to) mollify your opponents into silence, then you could at least be explicit about it.
What happens when the lender of last resort runs out of money to loan out?
Why should we limit ourselves to the history of the United States?
Please provide reasoning and/or evidence to support your assertions in the above paragraph.
Strictly speaking, a full-reserve bank that promised completely on-demand redemption and/or other access to one’s actual money would need to be open 24 hours a day, 7 days a week. However, if you’ll look over the thread carefully, no one (certainly not myself) ever made the assertion that a full-reserve bank must also be a completely on-demand institution. There’s nothing wrong with stipulating that bank-note redemption must be done when the bank is open for business.
As far as I’m concerned, your answer wasn’t poor at all. Kaz should be the one apologizing to you for engaging in extremely bad debating form with his name-calling.
Not really.
FRB with notes not redeemable on demand (my definition or what you mean in your first example) is a self contradictory idea. It cannot exist. Notes not redeemable on demand is not fractional reserve banking, and by arguing that it is, and therefore not inherently fraudulent, you are just committing another fallacy.
Instead of trying to find ways to tell people they are committing fallacies, let’s be more concerned with definitions because that is where this discussion gets complicated.
What I said in my first example DOES include notes being redeemable on demand. So i’m not sure what you mean.
Both of my examples include the bank offering the customer the opportunity to redeem on demand. However, in one example, the bank makes it clear that it makes the same promise to all customers while simultaneously holding <100% reserves.
My key point is that saying to a customer “you can redeem your money at any point” but not telling them that you make the same promise to all customers while simultaneously holding <100% reserves is fraudulent by omission
At any given time they show up and demand for it. Not at any given time in the absence of the customers desire to trade the bank liability in.
I think that difference is important. I assume you think this difference is irrelevant. Could you explain why?
At any given time they show up and demand for it. Not at any given time in the absence of the customers desire to trade the bank liability in.
I think that difference is important. I assume you think this difference is irrelevant. Could you explain why?
I fail to see how you think that I’m saying that a promise doesn’t imply the ability to perform it? It does. And what does the promise say? It says that the bank should be able to pay up on that point in time where the person demands that the bank pays up. It doesn’t promise that at any given time that the person doesn’t want the bank to pay, it will still be able to pay up.
Again: you have acknowledged that the bank could be able to pay up all contracts at the point in time they are demanded, if I’m not mistaken, right? (If the bank estimates correctly when the people show up and demand their gold.) In this scenario: where is the fraud or negligence?
But you are committing fallacies, because your definitions aren’t coherent. Same problem Adrian has. You guys are twisting words to fit your conclusions.
For example, Adrian defines fraud as something different than fraud is understood to be. So when people say “FRB Is fraud” Adrian can say, “No it isn’t” because fraud doesn’t mean fraud, it means failure to fulfill a contract! It’s like if I held up an orange, and said, “This is an orange”, Adrian would say, “no it isn’t because an orange is white on the inside, has a stem and a hard red skin!”
The entire free banker argument rests on this sort of dishonesty. When A is not equal to A, free banking makes perfect sense!
I don’t think you’ve read my posts. AdrianHealey and I don’t agree on this topic.
And I explicitly said that making the statement “FRB is fraud” or asking the question “is FRB fraud?” does not make any sense and needs to be clarified.
I agree with you that fraud is fraud and is more than just failing to fulfill a contract. My point is that no one is being specific about what FRB entails, because it can mean different things and still be a form of FRB. It depends on what exactly the bank is promising.
Thoughts?
What is in my parentheses refers only to the definition of “redeemable on demand”. Perhaps it is clearer now.
And I’ve said: given your definition, I still don’t see it as fraud and all the arguments still stand.
Feel free to proof why it follows from your definition of fraud the FRB situation is fraud.
You’re once again assuming clairvoyance in this situation. How can the bank or anyone else be able to distinguish the times that the person doesn’t want the bank to pay from the time the person does want the bank to pay, all ahead of time?
With all due respect, I think I’ve already explained where it is, many times over.
What I’ll add here is that, first off, I don’t think suits for fraud or negligence will occur until the kind of situation you describe (x number of people show up to redeem their bank notes and the bank can’t satisfy them all) arises. At that point, the investigators/judges/etc. will make a determination as to whether the contracts were valid to begin with. If we assume arguendo that they conclude the contracts were invalid, then that would mean restoring things to their original state before the contracts were agreed to – i.e. giving back all of the depositors their money, perhaps with interest. Those whose redemption requests were already satisfied simply have less to worry about in that case. Anyways, I’d imagine that once one fractional-reserve banking contract (of the kind you describe) is found to be invalid, the precedent will be established that any such contract will be deemed invalid. This, of course, would amount to a “ban” on such contracts.
I’m going to take the fact that you only responded to part of my last post to mean that the rest of it stands as is.
To me, it is fraud when a bank tells a client that he can redeem whenever he pleases but doesnt tell him that the bank makes this promise to everyone but holds <100% reserves.
AdrianHealey, to your credit, I am starting to think this is more subjective than objective now. However, I would still call this fraud/deception/meaningful omission, etc. ----> i feel the bank is at fault for making this statement (not just when there is a bank run).
It’s impossible to have absolute certainty concerning this. It’s estimating human behavior/consumer preferences - which we know as entrepreneurship. As far as I understand you’re argument; you are saying: because there is uncertainty, it ‘must’ mean that the bank must keep all gold in the vault on all times. But that’s only true if you are really risk averse.
It’s true: the bank can not know with absolute certainty when people will show up. But I fail to see who they are wronging if they actually manage to estimate consumer preferences correctly?
And I’m not sure why you would say that. My argument against this is the following: it only promises to pay up on demand and as long it’s good on that promise, it’s not defrauding anyone.
This line of argument is, imo, based upon the condition that fraud is happening when there is a possibility that the bank isn’t able to pay up. Which is true: there is a possibility that the bank won’t be able to do so. But in the absence of actually not being able to pay up on any specific point in time; where is the fraud? Could you clarify where the concept fraud is relevant?
“I’m going to take the fact that you only responded to part of my last post to mean that the rest of it stands as is.”
I’m not familiar with this line of expression.
I didn’t respond to the rest of your post, because I would just repeat myself, which is not really productive. You probably have similar feelings by now too.
here it is again:
At any given time… Not at any given time…
No, I’m not taking you out of context either. Your definitions are becoming even more nonsensical. In the second part, you are talking about a contractual term that is itself self-contradictory. How can you be obligated to redeem a claim when no claim is brought forward in the first place?
To me, the question is whether such a contract is valid to begin with. I think it’s safe to say that a contract is either valid or invalid, legitimate or illegitimate, throughout its entire “life”. Either it’s “born” one way or it’s “born” the other. A contract’s validity cannot subsequently change. Risk has nothing to do with it.
Let me ask you this: do you think Ponzi schemes are inherently fraudulent? Why or why not?
As far as I can tell, they failed to uphold their sides of the contracts. Whether they estimate consumer preferences correctly is therefore irrelevant to me.
Early investors in Ponzi schemes typically profit, and often handsomely at that. But that doesn’t make such schemes any less fraudulent, in my eyes.
I don’t feel like I’ve been only repeating myself. I try to re-work and refine my arguments in each subsequent post I make. Of course, I can’t literally make you or anyone else see what I see.