Friday, August 14, 2015

Fractional Reserve Banking is Fraud



I know, on the surface it seems a stunning statement coming from bionic.  It all depends on the definition of fractional reserve banking, I guess. 

Mr. Engel has provided a definition:

But herein lies the problem: what fractional-reserve banking is, by definition, is a mixture of the two types of contracts expressed above.  It is, by definition, a contract wherein it is agreed upon that the money deposited is a bailment that is to be returned upon demand by the customer; wherein at the same time, that money is loaned out to some other customer.

This certainly could be a definition of fractional reserve banking; I imagine the entire controversy could be quickly put to bed if everyone accepted this definition (spoiler alert; they don’t). 

It is certainly a breach of contract, and could in addition be deemed fraudulent (although I do not like the concept of “fraud” nearly as much as I like just dealing with terms of a contract). 

What you define is not today’s banking relationship – today’s contract is not a bailment.  You seem to agree with me on this if I have read your post correctly.  Please advise if I am drastically off base on this.

I will keep my reply simple and short, as we seem to be making progress and we agree far more than not. 

You offer one definition.  I will offer two others.

From Wikipedia (emphasis added):

Fractional-reserve banking is the practice whereby a bank accepts deposits, and holds reserves that are a fraction of the amount of its deposit liabilities. Reserves are held at the bank as currency, or as deposits in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.

Per your definition of the term, today’s banking practice is not fractional reserve banking – there is no bailment today.  Yet Wikipedia says that today’s banking is fractional reserve banking, even though there is no bailment.  I don’t get it…. But that’s just Wikipedia, what do they know?

From Mises (emphasis added):

Fractional-reserve banking (or FRB) is the widespread banking practice in which only a fraction of a bank's demand deposits are kept in reserve and available for immediate withdrawal (as cash and other highly liquid assets), whilst the remaining cash is lent out to borrowers (and so is never actually available for immediate withdrawal to legitimate deposit-holders). The bank in effect lends out most or even all of the funds it receives in demand deposits, whilst at the same time guaranteeing that all deposits are available for immediate withdrawal upon demand. Fractional reserve banking is currently legal and practiced by all commercial banks.

Mises.org also says that today’s banking is fractional reserve banking, even though there is no bailment.  But according to your definition, it isn’t – as a bailment is promised in order for your definition to apply.

Today’s practice is FRB, so say Wikipedia and Mises.  FRB is not today’s practice, so says Mr. Engel.

You can understand my confusion.

Nothing personal, but I have never read your definition before – I think until these other sources come around to your view, I will continue to base my arguments and positions on their definitions.

Perhaps you should write the definitions for these entities.

I will be clear (and repetitive): a contract that grants two people the same right to the same deposit at the same time would be illegitimate; it would be deemed an invalid contract. Depending on the details of the situation, it could be fraudulent. 

This is consistent with your definition of FRB, I believe.

Four points:

1)     This is not today’s contract. 
2)     Neither the wishes nor ignorance of the depositor will turn today’s contract into something it isn’t.
3)     Banks today do not practice fractional reserve banking – per your definition above. 
4)     Banks today do practice fractional reserve banking per Wikipedia and Mises.

Items 3) and 4) cannot both be true - banks today cannot at the same time practice and not practice FRB.

There is nothing fraudulent in banking as practiced today beyond the issue of the monopoly – which technically I think isn’t fraud (but I don’t want to spend any time thinking through this right now); it is just the only problem to complain about.

It seems to me that your debate is not with me.  Your debate is elsewhere.

27 comments:

  1. I was anticipating exactly this. I'll keep my next one teeny tiny.

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    1. Mr. Engel

      I truly am curious as to your reply, yet it has been several days.

      Have I missed it?

      Delete
  2. BM, A small thing here. But did you misspeak when you said that #3 and #4 cannot both be true? As you have stated them, aren't they both true?
    3) Banks do not practice... per your definition.
    4) Banks do practice.. per Wiki and Mises

    Please correct me if I've misinterpreted. I think you are saying that it is not true that both:
    3) Banks *do* practice... per your definition.
    4) Banks *do" practice... per Wiki and Mises.

    Small thing here, and please correct me.

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    1. You are correct, I will fix this.

      Delete
    2. Actually, gpond, my fix was slightly different.

      Per Engel's _definition_, banks do not practice FRB - yet per Wikipedia and the Mises _statement_, they do.

      Delete
  3. By 'per your definition' I was speaking as you did, of Engel's.

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    1. I hope my clarification helped - I don't want to overthink this thing.

      Delete
  4. With Central Banks it isn't even certain that member banks are not able to meet demand deposits at any time, even all at once.

    I don't think we should mix up Austrian economics and libertarianism in this case. AE makes a good case against FR and central banking, placing the blame for the business cycle on them. I don't think libertarianism speaks to the issue, especially if people can form voluntary contracts using FR banking.

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    1. My comment is premised on the idea that FR is not fraud - of course, Mr. Engel has promised a reply to the confusion presented by the dueling definitions above....

      "AE makes a good case against FR and central banking..."

      "AE makes a good case against FR..."

      Separate FR and central banking. I believe banking cut loose from the state, whatever it looks like (including non-fraudulent FRB…again, pending clarification from Mr. Engel), will provide the most stable and robust banking environment. Better than full reserve banking, for example. Either markets work or they don’t.

      I understand the FR case of AE. However, in a market left free, I don’t find the possibility of a better alternative. I cannot find it, but I am certain I have read a quote from Mises (maybe it was someone else), to the effect…the only cure for inflation is death. The implication of this quote to me is clear.

      This is why I focus on the monopoly, and not any specific banking business model / practice. It’s like saying that a central committee can select the best method to build a car, and all car builders must follow this method.

      Delete
  5. It doesn't matter what you call it as long as you get the facts right.

    In fact, banks do not lend money, they create money(actually debt) with each "loan" they make. The only true money these days is paper and coins, everything else is debt. This effectively makes our monetary system a ponzi scheme. And as all ponzi schemes fail, we can say ours failed in 2008.

    These days banks don't need your deposits, they get all the "money" they need from the central bank in exchange for all the worthless paper they wrote prior to 2008. So effectively there's no fractional reserve requirement at all...

    If you've got a fair amount in a savings account(over about $100,000) be not surprised if your bank sends you a letter telling you to make other arrangements or they'll start charging you a fee to store your "money..." as happened to a friend of mine. Actually, once it's put in a bank, it's no longer yours nor is it money...per the definition above.

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  6. Yep, but people like frauds.
    For example, people love to hear the story that Jesus Christ never existed. It has been told many times, by many people, through many generations. A fraud that people love is a great way to make money.
    Second example: all the freudian BS about sex. People revel in that fraud. Even the most intelligent enjoy that one.

    And everybody knows it is a fraud.

    Sovereign State can't really have a negative interest rate, right? See? People love this stuff.

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  7. Maybe he needs to be pointed to David Hume's Is-Ought Guillotine.

    I pray for teeny-tiny. Perhaps invisible would be a superior choice.

    BTW, Bionic, you've been on fire since your "block" of a few months past, do please continue this most important work you've taken on.

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  8. Imagine you walk into a polished gourmet bakery filled with sacks of flour and sugar, large baking equipment, and men with white chef’s hats bustling about tasting frosting. The warm smell of sugary goods envelops you. You select a $50 cake from the display case. The baker assures you it will make the perfect finish to a fine meal and you are going to love it. Taking it home and cutting into it, you discover it is fake, paper mâché. Angrily returning to the shop, you confront the “baker” who points to a tiny sign in the corner with a lot of fine print. Buried in the middle of minutia, one sentence states, “Not edible.” Is this establishment practicing fraud? Bionic says no. Bionic thinks only explicit contract terms count when forming contracts; thus this is a legitimate business. Most others, including me, say this is fraud.

    When Engel talks of bailment and mises.org talks of guarantees, I think they are recognizing implicit contract terms. I think both might grant that the bank legalese contract fine print probably attempts to evade making any commitments in black and white whatsoever. The throwaway two sentences buried in the Citibank contract about creditor/debtor and no fiduciary duty are as ludicrous as the “Not edible” provision in the bakery contract. It is ludicrous to think that everyone opening a bank deposit account at Citibank is knowingly choosing to lend Citibank their money interest free, at risk, with no consideration, out of the generosity of their hearts, so Citibank can engage in unknown, unquantified, 10:1 leveraged speculation with it. Citibank’s deeply buried explicit contract terms allowing themselves to do this directly contradict common sense as well as the entire body of public education, marketing, and understanding of what a “bank” is.

    So the definition of fractional reserve banking is not the heart of this issue. The definition of fraud is. If fractional reserve banking however defined were not implemented with fraud but instead diligently practiced with full disclosure and informed consent, no libertarian could object.

    A full legal definition of fraud can be found here: http://dictionary.law.com/default.aspx?selected=785

    Reading this, I think modern bank fractional reserve banking practices fit this definition. Note, I focus solely on the practices employed in fractional reserve banking, not the fact banks practice it. Banks actively promote a false impression via a systematic campaign of misinformation, intentionally conveying in every conceivable way that a bank account balance represents money held in bailment. Therein lies the fraud.

    Only explicit legalization of such fraudulent practices by the Federal Reserve Act keeps banks out of the slammer. By ordinary standards of fraudulent contracting any 10:1 leveraged private company who didn’t have this legal exemption who practiced the exact same behaviors, i.e. peddling risky debt or other financial instruments as if identical to cash with no disclosure, would be thrown in the slammer for fraud in a heartbeat. No question.

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    1. Perhaps we should let Engel speak for himself.

      Expand on the implicit contract of the baker.

      Now expand on the implicit contract of the banker.

      To do this, you must examine current general practice in each industry and the explicit and implicit reality of satisfaction of the customers of each.

      What would a reasonable person say about each? Not in someone's version of history, but today?

      Go ahead, AA8; you write this post - I am pretty sure I have done this more than once.

      I already know the ending. I see it around me every single day in thousands of successful baking transactions and billions of successful banking transactions.

      Delete
  9. "Perhaps we should let Engel speak for himself."

    Without a doubt. I merely speculate. Would be great to have him here commenting.

    "To do this, you must examine current general practice in each industry and the explicit and implicit reality of satisfaction of the customers of each."

    Customer satisfaction is in no way relevant to a determination of fraud. Nowhere in the above legal definition is that included. In fact, the best frauds are those that leave everyone satisfied with no one realizing they've been cheated. Players of the shell game leave satisfied it was a legitimate game of chance and there really was a ball under one of the cups at the end that they had some chance of finding. Had Bernie Madoff been a little smarter, he could have unwound his fake trades so as to make everyone blame the associated losses on the market. Everyone would still think his had been a legitimate investment fund and their losses just the price of receiving a genuine shot at stock market success.

    "What would a reasonable person say about each?... I see it around me every single day in thousands of successful baking transactions and billions of successful banking transactions."

    That there are billions of transactions does not constitute evidence they are not fraudulent. A reasonable person given a two week long, A-to-Z walkthrough of current fractional reserve banking practices, including the actual price tag, would conclude they are fraudulent. However, I would guess maybe 1 in 100,000 people, eggheads like us, are even capable of attempting that effort. It takes superior intellectual acuity. It takes years of background study of foundational economic concepts. It takes patient investigative work into the law and esoteric financial practices. It takes unwinding how the sprawling scheme of deception fits together. It takes following not just the money but the chains of indirect value transfers.

    The average banking customer hasn't the foggiest idea they are participating in fractional reserve banking at all, much less that a bank account balance is technically an interest-free, high-risk loan to a bank, or they are being financially raped elsewhere to subsidize the whole scheme. This rape occurs in part owing to the cartel defrauding in concert (monopoly, which we both decry and agree is blameworthy). But this rape also occurs just as significantly owing to the bulk of the costs of fractional reserve banking getting paid for through inflation (which you seem to consider acceptable).

    Sure, people do not perceive inflation. Thus they do not protest against it, do not inquire into whose pockets their inflated away value is being transferred. This does not mean inflation is not stealing from them. If I slowly steal 5% of your gold coins from your stash every year without you ever noticing, this is still theft. Lack of detection or comprehension by a victim does not render a scheme not fraudulent. Just because the mark is not smart enough to pick up on the con and even keeps happily coming back for more does not make the con legitimate.

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  10. The closer analogy between the fraudulent banker and fraudulent baker (“Citi Bakery”) would be if the baker mixed in an obscure toxic industrial chemical to otherwise normal cakes to uniquely improve the flavor and texture…despite this chemical generating a markedly higher long term incidence of cancer in anyone eating the cakes.

    Customer satisfaction would remain high because no one would ever become the wiser to the true cost paid in suffering and shortened lifespans from eating these toxic cakes. The costs are too indirect and removed from their source to detect. So cake customers would keep coming back, demanding more, not knowing how dearly they were actually paying elsewhere.

    Applying Bionic’s reasoning to this situation, Citi Bakery’s business practices are wholly legitimate. Their own cancer deaths simply the price customers willingly chose to pay because “Not edible” was buried in the explicit contract terms within a sea of fine print on the small sign in the corner. Per Bionic, that a baker is commonly presumed to sell products comprised entirely of edible foodstuffs is irrelevant to the contract.

    After all, says Bionic’s reasoning, people voluntarily bought the cakes from the bakery. Then they chose to actually eat them. This necessarily must mean they valued the unique cake flavor enough to pay whatever the price. The fact no one ever read the sign carefully, analyzed its terms, nor did weeks of background research to uncover the actual cake ingredients (requiring advanced chemistry expertise), is their own problem. It is on their own heads that customers failed to realize Citi Bakery despite all appearances and statements is not an actual bakery in the commonly understood sense of the term.

    I disagree. To me, Citi Bakery, like Citibank, by patently violating implicit contract terms has plainly engaged in fraud.

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    1. The practice of fractional reserve banking has been commonplace and accepted for hundreds of years; you want to compare this to a baker poisoning his customers. I am speechless.

      The bank is following the contract; when there is a dispute between the written contract and any other belief, wish, or pipe dream of one of the contracting parties, the written contract rules. Do you suggest a more just remedy?

      No one is cheated – every dollar they put in is also a dollar when it comes out. Value is subjective – that the dollar might be valued differently in the time between these two transactions is no crime, it is a demonstration of the wonderful simultaneous work of William Stanley Jevons, Léon Walras, and Carl Menger.

      People are too stupid; this is your entire argument. Someone must babysit them to protect them from this supposed crime that is being conducted in precise accord with the contract and hundreds of years of historical practice.

      Please, start your own 100% reserve bank. Explain to these dolts the difference of your account and the fractional-reserve bank account. Let them know that you will pay interest and not charge a fee for storage – just like they get today. Oh wait, I forgot: you can’t afford to do this and stay in business.

      So let them know they will receive no interest and will in addition have to pay you $50 to open the account and 2% per year storage fee.

      See how many takers you get.

      Delete
    2. “The practice of fractional reserve banking has been commonplace and accepted for hundreds of years”

      Yes, in the past. _Not_today_. If today we asked 10 people crossing the doors of a bank what fractional reserve banking is, if they think they are engaging in it, if they think their bank account balance represents actual money they have a right to withdraw, I think none of those 10 people would get those questions correct. Practically 0% of bank customers understand what they are actually “agreeing to” when they open a bank account. In the past FRB was at least partially identified and disclosed as such. Even then, incomplete disclosure led to bank runs as fear and supposition filled the spaces left by lack of clear information and full disclosure on bank-issued debt worthiness.

      “you want to compare this to a baker poisoning his customers. I am speechless.”

      As am I that you apply the same principles that countenance the fraudulent baker when you countenance the fraudulent banker. I can’t fathom how your position asserts the very same systematically misleading marketing and disregarding of implicit contract terms that are plainly fraudulent when employed by the poison baker to be legitimate when employed by the modern fractional reserve lending banker. Tainted cakes are no less devastating to human life than tainted money.

      “The bank is following the contract; when there is a dispute between the written contract and any other belief, wish, or pipe dream of one of the contracting parties, the written contract rules. Do you suggest a more just remedy?”

      Yes, I suggest implicit contract is not less relevant than explicit contract. In the case of contradictory terms, a judge must resolve the discrepancy weighing various factors. Your statement “belief, wish, or pipe dream” focuses on the victim, the customer, but his mindset is not the focus for the judge. The judge is not a nanny. As you rightly point out, we must not and cannot try to protect a person from his own informed decisions. The judge instead must focus on those who misinform, those who intentionally create contractual conflicts between explicit and implicit terms, i.e. the modern day bank.

      As you rightly indicate in your last post, the question the judge should focus on is what would “a reasonable person” be led to believe by the actions of this banker. As is the wont of fraudsters, the modern day fractional reserve bank intentionally inserts a vague explicit contract term or two technically justifying its actions on paper, while simultaneously launching a massive disinformation campaign completely to the contrary of that contract term. The disciplined judge focuses on those decisions by the banker, not the belief, wish, or pipe dream hopes of any particular banking customers, which are irrelevant. The banker’s actions are what’s relevant as to whether he is committing fraud.


      “No one is cheated – every dollar they put in is also a dollar when it comes out. Value is subjective – that the dollar might be valued differently in the time between these two transactions is no crime”

      We both bow to the theory subjective value. All hail Mises. But subjectivity has no relevance to this issue. The dollar is valued less when it comes out than when it went in because when fractional reserve deposit balances are concealed as to their true nature, falsely dressed up to be something they are not, thus they are mistakenly treated as equivalent to money by the population at large. In that case bank credit creates a multiplier expansion of the money supply which devalues all cash rendering that cash-out a fraction as valuable as cash-in in terms of its conversation value to hard goods and services. There is nothing subjective about getting 1 bagel for a dollar today compared to 2 bagels for the same dollar a few years ago.

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    3. “People are too stupid; this is your entire argument. Someone must babysit them to protect them”

      This is not my argument. I don’t think you are stupid. Yet how many times have you carefully read Apple’s Terms of Service before clicking Agree or Google’s latest terms of service before performing a search? Each and every time? How many times have you stopped to take 20 minutes to read the poster some movie theaters put up in the corner or read the fine print on the back of their ticket listing their terms. How many times have you called your lawyer at $300/hr to research and then explain any ambiguous legal terms (like “fiduciary duty” would be to a less highly educated person). I’m guessing never. Does this mean you are stupid? I don’t think so. I think it means you have a life and must also rely on implicit contract terms to get through the day.

      If your views ignoring implicit contracting prevailed in our legal system, by not investing this crazy level of time and energy with every single transaction you make every day, you would be deeply vulnerable to getting nailed by a sneaky contract term. The reason you can sleep at night right now without fear of contracting your life away the next time you go see The Incredible Hulk at the theater is because you are relying upon the fact our courts don’t share your view that implicit contract terms don’t matter. Our courts would not enforce a theater’s explicit contract term that substantially contradicted implicit contract terms, such as one saying anyone purchasing a movie ticket owed their life savings to the theater owner. (If you still disagree, maybe I will open a theater near you. Better start scrutinizing the backs of your movie tickets!)

      If only explicit contract terms mattered, each and every smart, conscientious person out there including you and I would routinely fall into such traps. This has nothing to do with intelligence. This has to do with being adequately informed of what you are actually agreeing to when contract terms stray outside commonly expected norms. Informed consent to anything, I have no problem with. Uninformed consent, however, is not bona-fide consent.

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    4. “Please, start your own 100% reserve bank. Explain to these dolts the difference of your account and the fractional-reserve bank account. Let them know that you will pay interest and not charge a fee for storage – just like they get today. Oh wait, I forgot: you can’t afford to do this and stay in business.”

      Yes, that wouldn’t go far in the current environment for two reasons. The first reason is I don’t have the marketing resources to launch the massive public education campaign explaining fractional reserve lending practices to the common man who has been misinformed to the contrary by government “education” (propaganda) and bank marketing budgets funded by countless billions over recent decades.

      The second, more significant reason is opting out of using fractional reserve banking does not opt one out of paying the cost of fractional reserve banking! Inflation, the way fractional reserve banking is paid for hits the bottom line of _everyone_ including anyone switching to deposit banking with an account maintenance fee. So there is no point to pay for banking service twice. But, if deposit bank accounts were exempted from inflation, people would flock to me. Even with my fixed monthly maintenance fee to cover the cost of processing transactions, if cash-out would once again become more valuable than cash-in, people would line up to use my deposit bank.

      Who wouldn’t pay a service fee to park money in a place where rather than lose 3% purchasing power per year to inflation, the money gains 2% purchasing power per year due to capture of general economic productivity gains. Let’s do the math. Let’s say a bailment account costs $50 per month to cover transaction processing costs and 1% per year for storage costs (if specie is in use, 0% otherwise). A depositor puts in $100,000. Compared to a “free” modern FRB account paid for via inflation, he’ll net a 4% return in terms of preserved purchasing power. (3% + 2% - 1%) of $100,000 – 12 months times $50 = $3,400, a 3.4% better return compared to a modern FRB account. Not too shabby. Deposit $1,000,000 and the return would be $39,400, a 3.9% better return. Etc.

      No sane person out there would ever willingly agree to give up these kinds of returns just to avoid paying a $50 monthly service fee and 1% storage fee. No one.

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    5. I have not read your replies in any detail. I have no patience when one argues that written contracts don’t matter, or that verbal terms understood by only one party are the basis for an agreement that supersedes existing written terms and therefore obligates the other party.

      It is a nonsensical legal theory, and one sure to result in a chaotic world. Imagine the survival of a libertarian world (or even our world) if this was the case.

      “I didn’t bother reading the written contract that I signed; that isn’t what I believed.”

      Talk about opening Pandora’s Box. Laughable.

      In any case….

      https://en.wikipedia.org/wiki/Implied-in-fact_contract

      “An implied-in-fact contract (A.K.A. "implied contract") is a contract agreed by non-verbal conduct, rather than by explicit words. As defined by the United States Supreme Court, it is "an agreement 'implied in fact'" as "founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding."”

      A meeting of the minds is required. The terms are not embodied in an express contract.

      http://www.nolo.com/legal-encyclopedia/what-is-implied-contract.html

      “An implied contract is created when two or more parties have no written contract, but the law creates an obligation in the interest of fairness based on the parties’ conduct or circumstances.”

      They have no written contract.

      http://contracts.uslegal.com/types-of-contracts/express-and-implied-contracts/

      “Contracts implied in fact are inferred from the facts and circumstances of the case or the conduct of the parties. However, such contracts are not formally or explicitly stated in words.”

      Not explicitly stated in words. They are inferred from the facts.

      But what happens to the supposed implied contract if there is a written contract?

      http://causeofactionelements.blogspot.com/2009/09/implied-contract-vs-express-contract.html

      “However, as a general rule, the existence of an express contract covering the same subject matter precludes finding the existence of an implied contract, whether in fact or in law.”

      In fact or in law. Both parts are important, but I won’t do even this work for you.

      With this, I take my leave from this conversation and thank you for your time.

      Delete
    6. "I have not read your replies in any detail."

      Thanks for your candor on this point. This is your prerogative of course, but it does not bode well for reader confidence you have more interest in discovering truth rather than dogmatically defending a publicly stated position. The latter is far less appealing to potential readers of your blog than the former.

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    7. I did read AA8's replies, and i think he touched on a really important issue.

      "I don’t have the marketing resources to launch the massive public education campaign explaining fractional reserve lending practices to the common man who has been misinformed to the contrary by government “education” (propaganda) and bank marketing budgets funded by countless billions over recent decades."

      The idea of 100% reserve vs FR as a market test is based on a market educated by the state, or not educated at all (like most of history up to the last 100 years).

      Certainly could use some more detailed analysis. I enjoyed this back and forth between you two, until the end anyway.

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    8. "The people are ignorant"; this is the issue. Can you blame them? They are being served by a system that has not failed them (in the US) since 1934. It’s like spending time understanding oxygen in the atmosphere. Why bother?

      “Oh but there is inflation.” Compared to what alternative? The solution to inflation (to the extent there is one - which there most certainly isn't) is to remove the monopoly granted by the state.

      Far worse than inflation is the transfer of wealth and power to the government and the connected. The solution to this is to remove the monopoly. Yet too many supposed free-market types believe educating on FRB is more important than educating regarding the monopoly.

      In a free-market framework, given the validity of the written contract between bank and customer (the contractual relationship is, in fact, creditor / debtor), what solution (assuming there is a problem beyond the monopoly that requires solving, which I do not assume) do you propose, Mr. Szar?

      The answer cannot be another centrally-planned solution – 100% reserve banking; 100% reserve banking as the only valid form of deposit contract will only be achieved via force.

      Everyone is a critic with no free-market solution. The best they can do – “the people don’t know.”

      Just remove the monopoly. They will learn quickly enough without your concern. In all markets where the market is relatively free, the people get along just fine without your concern.

      It has come to this, apparently: free-market nannies replacing the nanny-state.

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    9. I'm suggesting a monopoly in education also has many ill effects. I propose that a free market in education may lead to a market that rejects FR and central banking. And I believe the market is changing education now.

      I wasn't suggesting a non-market solution at all.

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    10. I am all for getting government out of the education business - this and central banking are key.

      With that said, both logic and history suggest that there will always be customers who prefer paying no fees and receiving interest income in exchange for accepting some risk.

      To believe that the only thing stopping this is an educated public is to believe in fairy tales. As you include the word "may" in your statement, I understand you do not.

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