I’m a fan of philosophers who can write without descending into gibberish and who can do so clearly so that their point is not lost in a mire of groundless abstractions and colorful but ultimately useless metaphors. The philosophers I mentioned are mostly neo-Aristotelian (with analytic influences) or analytic.
Who do you think descends into gibberish? (Hegel? [:P])
PM me if you like, I’d rather not veer the topic further off track.
How nice. Unfortunately for you, I’ll just dismiss it.
Yes, there is. And it’s time you realized that people won’t take you seriously when you do such things.
Lol, teapot, kettle, african american.
Or perhaps showing you what you’ve been doing and seeing if you like it when it’s done to you. Did that thought ever cross your mind?
I never said I’ll dismiss it.
What the hell does that mean? It is true by definition. Fractional reserve works by banks lending out deposits instead of their own capital.
That’s not an explanation, that’s insinuation.
Why do you keep making this claim? Both Hayek and Mises claimed that banks can either keep the demand for real capital within the limits set by the supply of savings_,_ or they can keep the price level steady; but they can’t do both simultaneously. Mises flat out states that "banks must not lend more or less than has been deposited with them as savings." Do you not believe in the natural rate of interest? What do you think causes business cycles? You keep trying to prove Mises/Hayek wrong, and yet you never really back up this position with any kind of logical argument whatsoever. So far your only defense is that Mises believed that free banking would eventually lead to the end of fiduciary media.
No, it isn’t. I consider the holding of cash to be savings. So, if people are voluntarily holding the notes provided by a bank, then they’re foregoing real resources that may be lent out. It might well be that these savings are extremely short term, but the difference is one of degree not type.
The explanation is by and large the same as yours. The market rate is pushed below the natural rate, with the interest rate effect causing the structure of production to become longer than voluntary savings would support, eventually the market rate will rise or Ricardo Effects will cause the structure to become shorter regardless.
I just see that the market rate is pushed below the natural rate in a different way.
Esuric, your appeal to authority carries little weight. All the less so since neither the views of Hayek nor of Mises are homogenous on this subject. Both had long careers and intellectual journeys and fractional reserves in banking is one matter that they both changed their mind on. I’m in half a mind to simply retort that you’re trying to prove Selgin, White and just about every other economist over the past century wrong.
Now, if you’d kindly do some reading of free banking theory you’d find out that monetary equilibrium theory is not about keeping the price level stable, it’s about keeping MV stable and as such making money as close to neutral as is possible. If the market rate of interest is below the natural rate, the regular boom bust cycle follows. If it is above, then relative price levels will be distorted and the capital structure will be too short. Clearly I believe in the natural rate of interest, however, I believe demand for money is one form of saving, as I indicated to Stranger.
lol. the little troll can’t even write a single contradiction-free paragraph.
read what some ‘authorities’ working for the establishment say ?
You can consider that, but it’s false. If it were true, there wouldn’t be bank runs.
Is it just me, or has the term troll been used so much it’s lost what little meaning it had to start with? You may disagree with Giles (it seems you’d be in the vast majority if you did), but he hasn’t been trolling.
It is often effective to refute a fallacy via simply using the fallacy against them. And, that was clearly his intention.
Did you omit the qualifier “I’m in half a mind to simply retort that. . .” dishonesty? Or, did you merely miss it?
Ermm, why?
Why would there be?
Because people feared, rationally or otherwise, that their bank was insolvent and didn’t wish to lose their savings.
Why would the bank be insolvent if they invested their savings in it?
For the usual reasons (bad loans, reserve ratio too low, raids on reserves by other banks)? I don’t see how this pertains to whether or not cash holdings are savings.