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!