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Definitely not. Most libertarians I've encountered want hard money i.e. full reserve banking with no central bank money printing. In FRB you cannot have bank ru
by fidgewidge 4y ago
Definitely not. Most libertarians I've encountered want hard money i.e. full reserve banking with no central bank money printing. In FRB you cannot have bank runs and with a restricted central bank which can't print more money you can't have ZIRP and the wild swings all over the financial system that it had caused. Instead you have a system in which bank accounts don't pay interest but that's acceptable in many cases because there also isn't any inflation, and if you want a return you invest in a fund that exposes the liquidity constraints in its terms.
The above scheme requires far less government regulation as well, but it does need some, mostly an extension of the idea of theft to encompass fractional reserve banking.
- miguelazo 4y agoI suppose some or even most libertarians would agree with that, although that system is just rigidly regulated in a different way. I think the classic Libertarian model would be private banks, totally disassociated from government. Further, full reserve banking and fixed supply monetary systems are the stuff of fantasies. Totally infeasible in the real world.
- fidgewidge 4y agoThey're both entirely feasible. The usual canard is that without fractional reserve there is no lending or not "enough" lending, but with full reserve there is still lending of course because people would like a return on their assets. There would be less bad lending but that's what we want, even if it leads to a temporary drop in GDP.
- miguelazo 4y agoWasn't the main concern that a fixed quantity of money chasing a constantly increasing quantity of goods/services would eventually cause severe deflation?