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Bitcoin folks need to understand that fractional reserve banking doesn't mean holding less in assets than you have in liablilities; it simply means that you hol

by tdees40 13y ago

Bitcoin folks need to understand that fractional reserve banking doesn't mean holding less in assets than you have in liablilities; it simply means that you hold less cash (or very liquid assets) than you have liabilities. What the author of this post describes is just fraud, not fractional reserve, and while libertarian types love to conflate the two, they are emphatically not the same thing.

baddox 13y ago
Well "fraud" implies deception. I think the argument that "libertarian types" make is that very few people understand how money works at a high level (namely that the money supply can increase up to the money multiplier), and perhaps that the people who administer high level finance deliberately set things up to benefit themselves at the cost of the "common man." I don't think many people argue that fractional reserve banking literally constitutes fraud in the traditional civil or criminal justice system.
- _delirium 13y ago
  Murray Rothbard is probably the most influential example. He argued that fractional-reserve banking is fraud and should be effectively outlawed by regular tort law (not by government regulation). He had a bit of a running disagreement with Von Mises over it: http://www.garynorth.com/public/9714.cfm http://www.garynorth.com/public/9714.cfm
  - etherael 13y ago
    That article was interesting about the utilitarian Mises vs the natural law Rothbard, but it was completely wrong about the 100% reserve clause Rothbard insisted as essential being necessarily enforced by the state. It sounds like the writer has not heard of Rothbard's proposed anarchocapitalist systems, polycentric laws and competitive arbitration and enforcement organisations.
    - baddox 13y ago
      Yeah, here's the relevant quote where he gets it wrong, or at least uses misleading wording: > Mises openly rejected the idea that government should have any role in setting a specific percentage of gold and silver or other assets, including bank deposits, in relation to their issuance of what he called fiduciary media, but which hard money advocates refer to as fiat money. In contrast, Rothbard called for 100% reserves.

by tdees40 13y ago

baddox 13y ago

Well "fraud" implies deception. I think the argument that "libertarian types" make is that very few people understand how money works at a high level (namely that the money supply can increase up to the money multiplier), and perhaps that the people who administer high level finance deliberately set things up to benefit themselves at the cost of the "common man." I don't think many people argue that fractional reserve banking literally constitutes fraud in the traditional civil or criminal justice system.

_delirium 13y ago
Murray Rothbard is probably the most influential example. He argued that fractional-reserve banking is fraud and should be effectively outlawed by regular tort law (not by government regulation). He had a bit of a running disagreement with Von Mises over it: http://www.garynorth.com/public/9714.cfm http://www.garynorth.com/public/9714.cfm
- etherael 13y ago
  That article was interesting about the utilitarian Mises vs the natural law Rothbard, but it was completely wrong about the 100% reserve clause Rothbard insisted as essential being necessarily enforced by the state. It sounds like the writer has not heard of Rothbard's proposed anarchocapitalist systems, polycentric laws and competitive arbitration and enforcement organisations.
  - baddox 13y ago
    Yeah, here's the relevant quote where he gets it wrong, or at least uses misleading wording: > Mises openly rejected the idea that government should have any role in setting a specific percentage of gold and silver or other assets, including bank deposits, in relation to their issuance of what he called fiduciary media, but which hard money advocates refer to as fiat money. In contrast, Rothbard called for 100% reserves.