@Tanstaafl
no no no... what the free banking position is this : once you take a reserve and hand it to bank X, Bank X would give you a piece of paper that face value equal to the reserve. Now the piece of paper will say something like "Reserves are payable on demand." Now obviously, if you go into the bank one day and hand over the piece of paper for the reserve, and the bank refuses to give it to you, that is fraud. But the practice of FRB is not fraud.. there is no where on that sheet of paper that says anything like "we will hold the exact same reserve for you in the bank." Now there are market solutions that deal with when a bank doesn't have enough reserves to cover the exchange, which if you wanted to know the solutions, read the books/articles ( which some are online). Also, the main risk bearer is not the person who put their reserve in the bank, but the entrepreneur who owns the bank, for he is the one who experiences the loss if he speculates wrongly...
Would the FRB system exist if they understood how it really works?
Well that is hard to say, since most people here have absolutely no knowledge of how they work... most people here would just rather read what Rothbard had to say about it or read de Sotos book and wouldnt even bother to see what the other side of the debate had to say. I think most people here would accept FRB, if they actually took the time to read up on it and put some thought into it.
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Selgin:if it is contrary to a wealth of evidence.
What constitutes historical evidence according to you? The conclusions are your own based on your own interpretations of the raw data collected. Such is the limitations of alleged "historical evidence". There are other interpretations of this evidence which contrary to your claim, White or you do not adequately address anywhere in my opinion. (See Hulsmann for example who has written extensively on this issue). But even White concedes the point that Banking in Scotland was not totally free, but then proceeds to make the argument that it was free enough to prove his case.
Every time without exception the free bankers bailout of the praxeological based argument and resort to this historical "evidence". There is always some point in the argument where it seems you run into a brick wall in logical argumentation and you resort to things like: 'well, history proves otherwise', or the "courts have consistently ruled in favor of......". To me, this demonstrates that the "free banking" argument rests on very shaky praxeolgocial grounds.
Izzy,
Let me make sure I am understandin your position. Because the bank does not explicitly guarantee to hold all of your deposit in reserve there is no fraud committed unless they fail to return your deposit on demand?
I am sorry but that sounds like a bunch of legaleze mumbo jumbo to me.
And just to be clear, I would not take a position that FRB should be made illegal nor that 100% reserve should be instituted by force. If people understand the risks involved in FRB'ing and want to deposit their money they should be free to do so.
I would also argue that you are wrong in who is bearing the risk. Whose capital is at stake? The entrepreneur who owns the bank, or the deposits of his creditors? Capitalization requirements for banks are so low that not only can the entrepreneur easily be wiped, so can the depositors. Both parties bear risk and I believe that the depositors in most situations have no idea the risk they are really bearing. Thus my questioning of whether FRB'ing would exist if enough people truly understod how it works.
calling it mumbo jumbo is absurd... that is like saying something like, "yeah right, if you think the market is going to give decent wages to workers, this is just a whole bunch of mumbo jumbo." But Selgin and White do go into further detail on this topic on the 'We are not Devo(lutionists), We are Misesians' article...
Tanstaafl:And just to be clear, I would not take a position that FRB should be made illegal nor that 100% reserve should be instituted by force. If people understand the risks involved in FRB'ing and want to deposit their money they should be free to do so.
understood, the debate is not really about if FRB should be abolished in a free society by force, it is about if FRB is efficient to last under a free society
Tanstaafl:I would also argue that you are wrong in who is bearing the risk. Whose capital is at stake? The entrepreneur who owns the bank, or the deposits of his creditors? Capitalization requirements for banks are so low that not only can the entrepreneur easily be wiped, so can the depositors. Both parties bear risk and I believe that the depositors in most situations have no idea the risk they are really bearing. Thus my questioning of whether FRB'ing would exist if enough people truly understood how it works.
The entrepreneurs capital is at stake, just like in any other business... there is little to no risk to the depositor... I understand your concern about whether FRB would exist if people actually knew how it works because your interpretation of FRB is from Rothbard view or deSotos view but such views are wrong interpretations on FRB. Selgin and White have responded to most criticisms but most people still want to say the same old criticisms towards FRB, which is why Selgin gets very frustrated at times because he has spent much time and energy already answering them...