Economics Questions

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Sat, 06 Feb 2010 03:18:15 GMT

Imposed by a nationwide full reserve law it would.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Fri, 05 Feb 2010 20:50:11 GMT

scineram:

No, I said artifically restricting bank lending will decrease investment.

It's artificial because you say it is? You keep saying the same thing over and over again but in the end, it amounts to the same thing.

Money held in a demand deposit and not loaned out (that would qualify it as hoarding) is a decrease in investment according to you and detrimental to the economy. It would retard progress.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Fri, 05 Feb 2010 20:16:26 GMT

No, I said artifically restricting bank lending will decrease investment.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Fri, 05 Feb 2010 16:22:30 GMT

scineram:

What, who talked about hoarding other than you?

You did. You said people holding their money in a bank would depress investment. It would retard progress.

scineram:

The latter. The former would just retard progress.

How would it retard progress? By

scineram:

Increasing interest rates by reducing the efficiency of the mechanism channeling saving into investment, hence depressing investment.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Fri, 05 Feb 2010 16:19:10 GMT

What, who talked about hoarding other than you?

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Fri, 05 Feb 2010 15:49:49 GMT

scineram:

DD5:
The price system will coordinate the changes in real credit and interest rate that result from hoarding.

Yes, by increasing the supply of fiduciary media thus decreasing the price of credit.

So again, you're back to hoarding is detrimental. Unbelievable! We're talking about people holding money either under their mattress or in a 100% reserve bank. Make up your mind. Detrimental or not?

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Fri, 05 Feb 2010 13:18:44 GMT

DD5:
The price system will coordinate the changes in real credit and interest rate that result from hoarding.

Yes, by increasing the supply of fiduciary media thus decreasing the price of credit.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Thu, 04 Feb 2010 19:48:15 GMT

scineram:

I never said hoarding is detrimental. Just don't want to artificially restrict credit.

They're not restricting anything. If they are hoarding by restricting consumption, then resources are freed from consumption to higher order stages just like in the case of investment. That is the whole point of that quote. The price system will coordinate the changes in real credit and interest rate that result from hoarding. If you agree with this, then consider to retract the following statement:

scineram:

Increasing interest rates by reducing the efficiency of the mechanism channeling saving into investment, hence depressing investment.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Thu, 04 Feb 2010 19:02:56 GMT

I never said hoarding is detrimental. Just don't want to artificially restrict credit.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Thu, 04 Feb 2010 18:51:21 GMT

scineram:

Rothbardian fallacy.

That hoarding is detrimental is a Keynesian fallacy. This is one fallacy that has been debunked over and over again by Austrians. A fallacy which you are trying to bring back to life.

Here is Mises and [not Rothbard]:

Whenever an individual devotes a sum of money to saving

instead of spending it for consumption, the process of saving

agrees perfectly with the process of capital accumulation and

investment. It does not matter whether the individual saver

does or does not increase his cash holding. The act of saving

always has its counterpart in a supply of goods produced and

not consumed, of goods available for further production

activities. A man’s savings are always embodied in concrete

capital goods. . . . The effect of our saver’s saving, i.e., the surplus

of goods produced over goods consumed, does not disappear

on account of his hoarding. The prices of capital goods

do not rise to the height they would have attained in the

absence of such hoarding. But the fact that more capital goods

are available is not affected by the striving of a number of

people to increase their cash holdings. . . . The two

processes—increased cash holding of some people and

increased capital accumulation—take place side by side.

(Mises, Human Action, pp. 521–22)

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Thu, 04 Feb 2010 18:36:38 GMT

Rothbardian fallacy.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Thu, 04 Feb 2010 18:31:26 GMT

scineram:

Increasing interest rates by reducing the efficiency of the mechanism channeling saving into investment, hence depressing investment.

Keynesian fallacy.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

DD5 — Thu, 04 Feb 2010 18:12:58 GMT

No2statism:

Which would result in less depressions and recessions?

The question itself is grounded on a false dichotomy. At least according to all those that advocate full reserves.

You are wrongly presuming that a full reserve requirement amounts to a special banking regulation. On the contrary, it is the removal of a special privilege granted to banks that no other business enjoys. I argued this in the other thread by pointing to the fact that banking is the only business where the time structure of their assets are always longer then its liabilities. This violation is a direct result of the privilege granted by the State to operate with fractional reserves. When there was no such privilege in the past, banks simply committed fraud according to the traditional laws of that time.

The more appropriate dichotomy should be:

Free banking subject to the same legal principles as any other business vs. Free banking with the privilege to operate with fractional reserves.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

scineram — Thu, 04 Feb 2010 17:48:47 GMT

Increasing interest rates by reducing the efficiency of the mechanism channeling saving into investment, hence depressing investment.

Re: Nationwide Full Reserve law and no Central Bank vs. no regulations at all

No2statism — Thu, 04 Feb 2010 01:35:05 GMT

scineram:

The latter. The former would just retard progress.

How would the former retard progress?

Thanks for answering:)