Sunday, August 23, 2015

Comments (and More on FRB)

I have really enjoyed the last couple of months as bionic mosquito.  I always enjoy my time on this project, but during the last two months there has been much in the way of wonderful comment and dialogue.  I always enjoy this aspect as it affords the opportunity for me both to learn and to hone my arguments and views.

In this time, I have written about 35 posts.  There have been well over 500 comments – several of these were mine, of course, but still a sizeable number for this blog in such a short period of time.  The topics most commented on (not in any particular order): libertarians and culture, right-libertarians, left-libertarians, bankruptcy, abortion, free banking / fractional reserve banking.

A very robust dialogue.  Thank you one and all.

There was a comment on my recent post regarding fractional reserve banking; I was accused of being “dogmatic.”  I tell you, I sulked all day, working through what was presumably intended to imply that I was closed minded.  I finally decided I liked the label; a nice post followed, something that helped me to clarify my own dogmatic thoughts.  I even have received 3 “likes” for the post! 

I know at times my frustration on the topic of free banking / fractional reserve banking comes out in my comments (well, on other topics as well).  I would like to explain….

The story begins with my dogmatism, I guess.  I listed several of my beliefs and views in the above-referenced “dogmatic” post.  From these, I reach conclusions on various topics libertarian / Austrian / etc.

I enjoy being challenged on these – and the challenges come on two levels.  Certainly, conclusions can be challenged.  As an example, I have absolutely zero doubt that Walter Block comes to his conclusion favoring evictionism from what he views as an unadulterated view of libertarian theory.  I come to a different conclusion regarding abortion – I also believe I come to it via an unadulterated view of libertarian theory. 

Now, one or the other of us might be applying the theory incorrectly; or, maybe libertarian theory doesn’t offer a clear-cut answer.  But I do not question Walter’s intent to stick to principle (call it dogmatic) when applying libertarian theory.

In other words, conclusions on real-world events grounded in theory offer one level of being challenged.

But on a deeper, more fundamental level – the dogma.  I feel quite settled on the six items listed in the dogmatic mosquito post.  If you want to challenge me on the basis of any of these – like my belief is not well-placed – I say pack a lunch, because you will be at it for some time.

But don’t pack dinner.  If you don’t hit me with your best shot within a couple of tries – something that causes me to think “you know, free markets might actually be a bad idea” or something like “I think saying hello with a punch in the nose and taking your candy bar is a good way to order society,” well I will grow tired.

After two or three back-and-forths, I will be done with the conversation – I won’t pay much attention to the next time you say the same thing, or something even smells like the same thing, or something that seems like you don’t understand what I have written…more than once.  You may not like the way it ends; this is of little concern to me by this point. 

It certainly happened on the recent FRB post: I have a firmly held view about the sanctity of contract, and an equally firm view about how to resolve disputes between parties if there is a disagreement regarding the interpretation of a contract. 

I believe allowing for violations of either of these views will lead a society to chaos – just open the door for people to say (and get away with saying) “OH, I didn’t know that THAT is what I signed up to do” and see how far your free-market libertarian world will travel – a perfect door opener for government intervention, protecting the little guy and all that.  Alternatively, I believe that when people understand that contracts cannot be ignored in such a manner, they will quickly learn how to order their relationships accordingly.

On the topic of fractional reserve banking and free banking (and banking generally), I have read Mises, Rothbard, Sennholz, Salerno, Ballvé, de Soto, Sechrest, Selgin, North, White (and others).  Some of these authors are for and some against.  I have read dozens of posts at LvMI and elsewhere.  I have commented and gone back and forth on several threads at LvMI and The Daily Bell.  I have asked a real expert on money and banking for the best critique of FRB, for the most clear-cut argument that it is fraud.  I read this as well (it was Rothbard – who I read, not who I asked!). 

My earliest post on these topics was almost five years ago – December 2010 (it’s still pretty good, I think).  I have written almost 130 posts with one or the other label (I know several posts have both labels, so perhaps 100 posts total).  In these posts, I have commented dozens of times to feedback.

Look, I am not saying that it isn’t worth trying to shake me on my view; I am saying that I have already read and considered the views of the best authors on this topic.  I have responded to the same criticisms more than once.

I have read clarity twice on this matter of fractional reserve banking and the fraudulent (or lack thereof) nature of the practice.  The first time was more a moment of enlightenment – a light-bulb moment – from an interview of Joe Salerno, at The Daily Bell – about painting a house both red and green at the same time.  It can’t be done, it is an impossibility.  It took me a while to properly understand and then internalize and contextualize his meaning; when I did, it offered much clarity on the matter.

The second was the definition provided by Mr. Engel.  Mr. Engel gets Joe Salerno’s meaning!  I agree with Mr. Engel completely on the issue of FRB when applying his definition.  The problem, however, remains – and is two-fold: his definition does not describe today’s banking practice, and his definition is not consistent with the definition offered by other sources.  I await patiently his promised clarification on this matter; it is now nine days and counting.  Perhaps I have missed it.

I suspect if the commonly accepted and understood definition was the one provided by Mr. Engel, all proponents of FRB would be against it – as a matter of contract and potentially fraud.  I know I would be.

If you want to criticize my views on FRB, I am open to it.  Just know that you better come stronger than or with something different than some of these aforementioned authors.  Stronger than Rothbard on fractional reserve banking?  That’s a high hurdle.

Anyway, returning to where I began: thank you all for the dialogue!


  1. I believe in the word of God, even when the precise language destroys the false beliefs I was indoctrinated with in school, church and mass media.
    I'm labeled dogmatic by detractors.
    I'm ok with that. They will not like me for it, but they dislike it because they disliked Him.

  2. Sorry I haven't been on my blog in a while. Work has been very demanding. I'll put something up this week.

  3. To become dogmatic on well thought-out and well reasoned positions is a desirable outcome.