tag:blogger.com,1999:blog-648884752216444797.post3387180676918485273..comments2024-03-28T09:59:13.754-07:00Comments on bionic mosquito: Jörg Guido Hülsmann on Fractional Reserve Banking and Inflationbionic mosquitohttp://www.blogger.com/profile/12002548958078731031noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-648884752216444797.post-10073219678895423212014-06-06T16:49:37.265-07:002014-06-06T16:49:37.265-07:00I also am not certain of his stand on the issue of...I also am not certain of his stand on the issue of FRB. I don't want to read too much into the parenthetical in the first cite, but it is not there for no reason. bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-68012443965219439542014-06-06T07:11:11.876-07:002014-06-06T07:11:11.876-07:00I agree that the phrase "affirmatively candid...I agree that the phrase "affirmatively candid" is a bit slippery. I don't think it means there should be a greeter at the door telling you they aren't warehousing. It seems to me that the contract along with common knowledge meets the criteria. It is hard to parse whether Guido agrees or not. gpondhttps://www.blogger.com/profile/01013837189187920036noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-29446330756389316942014-06-03T14:02:51.477-07:002014-06-03T14:02:51.477-07:00"It depends on whether the banker is affirmat..."It depends on whether the banker is affirmatively candid about the nature of his business."<br /><br />I have a struggle with this. Certainly, when (where / if) the normal practice was warehousing, this statement is reasonable.<br /><br />But today, when banks have not been warehouses for generations? Why must a bank affirmatively state it is doing the thing that, by practice, it has long been doing.<br /><br />In fact, given this decades (centuries)-long bank practice, I suggest a bank would be required to make an affirmative statement that it is warehousing the money - so when the depositor sees the warehousing charge he is not surprised.bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-35699201955035741362014-06-03T13:11:22.392-07:002014-06-03T13:11:22.392-07:00BM,
This may be the “money quote” that you were ...BM, <br /><br />This may be the “money quote” that you were looking for from Hulsman?<br /><br />See, especially, the second paragraph below. (Good book, by the way, and one filled with topics that you seem to be interested in.)<br /><br />——————————————————————————<br /><br />Thus fractional-reserve banking can arise as a perversion of money warehousing. But it can also originate as a perversion of credit banking. We have already talked about credit money and argued that it is unlikely to have any larger circulation because of the default risk and especially because most market participants prefer cash to credit instruments in spot exchanges. Now in order to make good for the latter deficiency, the banker might offer to redeem his IOUs on demand, that is, before maturity is reached. From the point of view of the customer, then, these IOUs can be turned into cash almost as securely as money certificates. We have to say “almost” because it would of course be impossible for our banker to comply with redemption requests that exceed his cash holdings—a problem that cannot arise in money warehousing, where every certificate is backed by a corresponding amount of money in the warehouse. <br /><br />So how does this practice appear from a juridical and moral point of view? It depends on whether the banker is affirmatively candid about the nature of his business. If he takes care to inform his customers that the redeemable IOUs are not money certificates and that he—the banker—remains the rightful owner of the money for the entire duration of the credit, then the practice seems to be unobjectionable. By contrast, if he insinuates that his IOUs are money certificates, we would certainly have to say that this is a case of fraud. Historically, it seems as though dissimulation has been<br /><br />Jörg Guido Hülsmann (2010-05-24). The Ethics of Money Production (LvMI) (Kindle Locations 1106-1116). Ludwig von Mises Institue. Kindle Edition. <br /><br />(By the way, 2 writers of which I am a "fan-boy", having a discussion? What's not to like? Roddis and the mosquito!)gpondhttps://www.blogger.com/profile/01013837189187920036noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-21107772234912296602014-06-02T20:47:28.861-07:002014-06-02T20:47:28.861-07:00I would envision, in a world of competitive bankin...I would envision, in a world of competitive banking and currencies, just such a market-required outcome; a simple description on the note of what it is / represents.<br /><br />As you suggest, there may very well be a market for it, at a price relative to its perceived value - and most certainly at a discount to a specie-backed note.bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-89525945038925022122014-06-02T20:35:33.575-07:002014-06-02T20:35:33.575-07:00I have been arguing for several years that person ...I have been arguing for several years that person who needs protection from FRB is the payee of the notes (assuming that the bank and depositor can work out their contract). The claims made on this note:<br /><br />http://upload.wikimedia.org/wikipedia/commons/7/7f/US_$20_1905_Gold_Certificate.jpg<br /><br />are simply not true for a FRB note. The note should be required to state on its face exactly what it is. The fully informed payee then can determine if he/she wants to accept it as payment. I suspect that such notes, if accepted at all, would be severaly discounted. They certainly should not exchange for the same value as a warehouse receipt for specie.Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.com