Where did the 'Fractional Reserve Banking' meme begin?

[portlandatheist]

So I remember learning about the Federal Reserve and how it works, how stocks work etc back in high school. No big deal, I'm no expert but have a cursory understanding. I've seen the 9/11 conspiracy theorists proclaim the evils of fractional reserve banking, then the Ron Paul supporters, but now I've heard about it from coworkers and at my local coffee shop.
Now, I know there are real concerns about our economy and the Zimbabwe crisis is a great example of a poorly managed currency but the entire Austrian school of economics is just plain stupid.
So where did this meme begin? It's all over the place here. Did it start with Ron Paulians? The 9/11 truthers? Austria? What is giving this movement life? The falling dollar? The credit crisis? Simply Bizarre.

[quixotecoyote]

Are you sure you mean to equate the Austrian school with goldbuggery?

[Gazpacho]

Antipathy toward the idea of lending is as old as lending itself. But you've asked specifically about fractional-reserve banking, which is referring more to the deposit side of things.

The banking system of the 19th century US was not that great. Counterfeiting and fraud were routine, there was nobody to verify a bank's solvency, and no guarantee if it failed. So suspicions were well-justified, in contrast to the situation today.

During that period the people who were suspicious of banks wrote, and they spoke. That rhetoric is still available for reading, and people do read it, without much appreciation for its context.

[Francesca R]

Originally Posted by portlandatheist

So where did this meme begin? It's all over the place here. Did it start with Ron Paulians? The 9/11 truthers? Austria? What is giving this movement life? The falling dollar? The credit crisis? Simply Bizarre.

It is one of many things that I hear about on this forum but nowhere else, and certainly not from anybody I consider to be a serious analyst of economics or banking (then again, those people would all be "apologists for the present arrangement"in the eyes of these memetics).

The credit crisis (not the first such sudden and massive reduction in ability to borrow and willingness to lend) is something that exposes non-trivial weaknesses in the financial systems and policy objectives and incentive structures of the world, but calls to go back on XAU-backed currency and outlaw fractional reserve ratios are IMO incredibly daft suggestions lacking the foundations of analysis, logic and historical knowledge.

[dudalb]

Gold Buggism and Anti Federal reserve crap are much more common then this Anti Fractional Banking nonsense.
What is ironic is that most of the people who support this crap theory would say they are strong supporters of Capitalism and a Free Market, while they want to abolish one of the very institutions that makes a modern Free Market possible:the ability of banks to loan money to people to start and expand businesses.

[OneDollarWilliam]

As someone who's understanding of economics, sadly, starts and ends with his wallet could someone give me a quick rundown of fractional reserve banking, and the argument against it?

[AvarianParakeet]

Sure,
Here's the basics of it. The banks in America don't have to hold all of their deposits in the bank at one time. Only a set reserve amount must be held behind. I believe it is 10% at this moment. So, if a man deposits $1000 at a bank, they must only hold $100 behind. The other $900 can be loaned out. The logic is that the man will not need his whole $1000 in deposits at any one time. If he does need a big deposit, then the bank can dip into the other 10% available.

The big problem people have with it is the multiplier effect on the money supply. That $900 loan will be spent as long as the receiver doesn't burn it in a field (if that was his plan all along, then the bank needs to reevaluate their lending policy). Most, if not all, of this money will work its way back into a bank somewhere as another deposit. This means that $810 dollars will be made in another loan. The cycle keeps going until it fades away. This effectively "creates money" and some people don't like that idea.

The benefits are pretty clear. It generally allows more economic growth. If the reserve requirement was dropped, then we'd see greatly reduced spending for big purchases and economic advancement would happen at a slower rate.

The drawbacks depend on your own thoughts in the end. If everyone wanted to withdraw their money, then the economy would pretty much implode. The likelihood of a nationwide bank run is pretty much nil though. In any event, if such a catastrophe happened to cause a nationwide bank run, then I assume a shotgun and a box of shells would be a better investment. For the most part, the Fed acts as a safety net. In the event of a local bank run, they'd be able to secure a low interest rescue loan from one of the Fed's branches.

Some state that the system does too much to encourage people to go into debt, although I personally think that the real problem lies with credit cards which are effectively out of the system. Mortgages and general loans are just investments that generally help one secure new wealth over time.

The last falls more to gold standard arguments that generally have more to do with fiat currency in general. Some people (I'm sure one from the forum will smell the blood in the water soon) believe that fractional reserve banking works with the fiat currency to grossly devalue the currency and that it will eventually become worthless. That's another discuss though.

I hope I covered everything.

[Gazpacho]

Originally Posted by AvarianParakeet

The big problem people have with it is the multiplier effect on the money supply. That $900 loan will be spent as long as the receiver doesn't burn it in a field (if that was his plan all along, then the bank needs to reevaluate their lending policy). Most, if not all, of this money will work its way back into a bank somewhere as another deposit. This means that $810 dollars will be made in another loan. The cycle keeps going until it fades away. This effectively "creates money" and some people don't like that idea.

This analysis is wrong, though, because it overlooks the fact that debtors are on the hook to the bank, and that the bank is on the hook to its shareholders. When these things are properly accounted for, there isn't any "multiplier" or "creation." There is just a temporary transfer of the right to use money that already exists.

[AvarianParakeet]

True. The assets aren't really changing at all since their gain is canceled out by the debt. It does keep the money moving though and effectively increase the spending power. I guess I should have described it more as the velocity (or speed, all my economics terms are jumbled ).

[Gazpacho]

I would describe it as full utilization of capital. I'm not sure if that amounts to the same thing.

[Francesca R]

Originally Posted by Gazpacho

This analysis is wrong, though, because it overlooks the fact that debtors are on the hook to the bank, and that the bank is on the hook to its shareholders

I think you mean its depositors.

[GreyICE]

Originally Posted by Gazpacho

This analysis is wrong, though, because it overlooks the fact that debtors are on the hook to the bank, and that the bank is on the hook to its shareholders. When these things are properly accounted for, there isn't any "multiplier" or "creation." There is just a temporary transfer of the right to use money that already exists.

This is a bit of handwaving of the issue. The banks 'create' money, pretty much period. This is clearly understood economics, and I don't quite get how you're getting around it with the fact that the debt has to be paid back (hint: The banks lend out the money as soon as it's paid back, so that doesn't do anything to the system).

The concept that there's 'extra' money in the system is reasonably easy to understand when we use something like bonds. Assume there's no bank, no stocks, only bonds. The only sound investment is bonds, therefore (it's the only one, actually). Therefore, if we assume people do not sit on money because they would not miss the opportunity cost of missing bond payments, they will always either spend the money, or invest in bonds (which will then go to people who spend the money).

The only difference is that in this case, no one can call all the bonds at once. Which is what a run on the bank does.

In reality the extra money is spread through a range of investments, including bonds, stocks, and other investment options, not just banks. The multiplier effect remains though.

[G-K-4]

Discussions of this sort always remind me of this.

As a basic introduction, how accurate is the description in the movie?

[Deus Ex Machina]

Originally Posted by portlandatheist

So I remember learning about the Federal Reserve and how it works, how stocks work etc back in high school. No big deal, I'm no expert but have a cursory understanding. I've seen the 9/11 conspiracy theorists proclaim the evils of fractional reserve banking, then the Ron Paul supporters, but now I've heard about it from coworkers and at my local coffee shop.
Now, I know there are real concerns about our economy and the Zimbabwe crisis is a great example of a poorly managed currency but the entire Austrian school of economics is just plain stupid.
So where did this meme begin? It's all over the place here. Did it start with Ron Paulians? The 9/11 truthers? Austria? What is giving this movement life? The falling dollar? The credit crisis? Simply Bizarre.

There were several publications in the late 70's or early 80's that were aimed at the "Fractional reserve Banking" evilness along with the Fed as a private institution.

I honestly don't remember who actually wrote them but the person that wrote them seemed to think that economics was all about swapping pigs and fruit in villages and that was a good thing.

[GreyICE]

Originally Posted by G-K-4

Discussions of this sort always remind me of this.

As a basic introduction, how accurate is the description in the movie?

Err, it's been a while since I saw the movie, but from what I remember, okay, given Hollywood.

It's a hell of a lot more complicated than the explanation, I'm sure, but yes, the banks only have a fraction of what they 'have' in savings.

[lomiller]

Originally Posted by AvarianParakeet

Sure,
Here's the basics of it. The banks in America don't have to hold all of their deposits in the bank at one time. Only a set reserve amount must be held behind. I believe it is 10% at this moment. So, if a man deposits $1000 at a bank, they must only hold $100 behind. The other $900 can be loaned out. The logic is that the man will not need his whole $1000 in deposits at any one time. If he does need a big deposit, then the bank can dip into the other 10% available.

The big problem people have with it is the multiplier effect on the money supply. That $900 loan will be spent as long as the receiver doesn't burn it in a field (if that was his plan all along, then the bank needs to reevaluate their lending policy). Most, if not all, of this money will work its way back into a bank somewhere as another deposit. This means that $810 dollars will be made in another loan. The cycle keeps going until it fades away. This effectively "creates money" and some people don't like that idea.

If you deposit $100 in a bank, the bank can only loan out $90 of it. Assuming that $90 is spent and the person who receives it deposts it you could loan out another $81, and so on. In the end you would have $1000 in debt (people who deposited money) $1000 in assets (people who you loaned money to) and you must have $100 in cash on hand. At that point you can no longer loan out money, but it means that $100 of real cash in the economy equates to $1000 of instantly redeemable cash equivalent.

This money multiplication is really just an outgrowth of the fact that $1 of cash circulates in the economy and creates more then $1 of economic activity. The people complaining about fractional reserve banking are essentially suggesting we limit economic activity to the amount of available money. They usually go a step further and say we should have a gold standard, so that economic activity is limited to the amount of gold in existence.


It isn’t really possible for everyone to want their money all at once unless their aim was too burry it in their backyard. Barring that, the cash is going to be sitting in someone’s account somewhere. The liquidity of individual financial institutions can be an issue, which is why the Fed has the power to act as a lender of last resort and lend banks the money they need if all their depositors try to get their money at once.

[Francesca R]

Originally Posted by lomiller

It isn’t really possible for everyone to want their money all at once

It is the same with the equity or bond holders of any traded corporation or the partners in a partnership, or the holders of any supranational or sovereign issuer (such as the US government). They can theoretically all "want" their money at once, but they can't all get it. What happens is that the price of their investment falls (or the yield to maturity rises, or the currency it is denominated in falls relative to others . . .) Until enough people change their minds and the demand and supply clears. In extremis the only way to achieve this is via a default event.

Quote:

The liquidity of individual financial institutions can be an issue, which is why the Fed has the power to act as a lender of last resort and lend banks the money they need if all their depositors try to get their money at once.

This is not fail safe either. Your (if you are US) FDIC only has enough readies for a few IndyMacs at a time. After that there is no plan B really. Oh yikes what a risky world eh?

Those who had no idea that such subterfuge was rife in the financial systems of the developed world probably would like to protest "informed consent", but I tend to think their ignorance was voluntary

[SaulOhio]

Those opposed to fractional reserve banking are not necessarily opposed to lending money. Its just that money that is lent out needs to be clearly identified as such. I mean that the deposits people have that are readily available for withdrawal should actually still be there in tha bank. Money lent out should first pay for investment instruments like CD's which cannot be withdrawn at will, at least not without a penalty.

As far as all the attacks on the Austrian school, how about actually saying whats wrong with it, instead of just calling it stupid?

I think of the Austrian School of economics as the most realistic, based on human nature as well as the assumtion that government is unable to change the fact that 2+2=4.

Abolishing fractional reserve banking would not end the practice of lending. It would simply introduce some self-discipline into banking by separating the money available for withdrawal from the money that is lent out.

[drkitten]

Originally Posted by SaulOhio

I think of the Austrian School of economics as the most realistic, based on human nature as well as the assumtion that government is unable to change the fact that 2+2=4.

[GreyICE]

Originally Posted by SaulOhio

I think of the Austrian School of economics as the most realistic, based on human nature as well as the assumtion that government is unable to change the fact that 2+2=4.

Why are you blaming the government here? The government does not do this. In fact, the government limits the banks ability to do this. The only way you could accomplish what you want is further government regulation.

Oh and yes. This does make the entire system a house of cards. A house of risky, unstable cards. And people wonder why I'm okay with some government regulation of the economy. Houses of cards are inevitable.

[SaulOhio]

Originally Posted by GreyICE

Why are you blaming the government here? The government does not do this. In fact, the government limits the banks ability to do this. The only way you could accomplish what you want is further government regulation.

Oh and yes. This does make the entire system a house of cards. A house of risky, unstable cards. And people wonder why I'm okay with some government regulation of the economy. Houses of cards are inevitable.

That may depend on how loosly you define "regulation". The government's proper role in a free market is to protect rights, such as property rights. Since fractional reserve banking results in inflation, which does rob people's savings of their value, making the practice illegal is a defense of individual rights. Regulation means government doing anything above and beyond such defense of rights.

I think the defining characteristic that differentiates regulation from legal protection of rights is an attempt to achieve specific outcomes, rather than simply setting basic ground rules and letting the system function on its own.

[GreyICE]

Originally Posted by SaulOhio

That may depend on how loosly you define "regulation". The government's proper role in a free market is to protect rights, such as property rights.

And yet whenever people start talking about other rights, such as the right to healthcare or the right to have some sort of shelter or the right to not starve to death in the streets, free marketers always come down and cry about how we're destroying the world and we're horrible communists and...

Oh. It's rights that you like that we have to protect! Silly me.

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Since fractional reserve banking results in inflation, which does rob people's savings of their value, making the practice illegal is a defense of individual rights. Regulation means government doing anything above and beyond such defense of rights.

Err, no. Regulation means regulation. It's not hard. You're pulling a classic No True Scottsman here.

"Government regulation hurts the economy."
"What about this?"
"We need to stop that immediately!"
"Isn't that Government regulation?"
"No, because it's protecting individual rights, so it's not TRUE Government regulation."

You're in favor of government regulation too. You just want it to be regulation you like.

Quote:

I think the defining characteristic that differentiates regulation from legal protection of rights is an attempt to achieve specific outcomes, rather than simply setting basic ground rules and letting the system function on its own.

I thought you were trying to eliminate the 'Fractional Reserve Banking' effect. Isn't that a rather specific result?

[Gazpacho]

Originally Posted by Francesca R

I think you mean its depositors.

I mean the shareholders, who are supposed to influence the bank not to make bad loans.

Originally Posted by GreyICE

This is a bit of handwaving of the issue. The banks 'create' money, pretty much period. This is clearly understood economics, and I don't quite get how you're getting around it with the fact that the debt has to be paid back (hint: The banks lend out the money as soon as it's paid back, so that doesn't do anything to the system).

Maybe. Maybe the bank needs to increase its reserves instead. The handwaving is in saying that "money will usually end up going this way" as if it's the only relevant possibility.

It's well understood throughout business that, when determining how much something is worth, you have to subtract out obligations. So I don't see how you can say that money is being created. What happens is that the use of money is allocated over time. Borrowers can use it, and what they are able to buy with it, while depositors don't. They aren't using the same money at the same time.

[Tippit]

Originally Posted by GreyICE

And yet whenever people start talking about other rights, such as the right to healthcare or the right to have some sort of shelter or the right to not starve to death in the streets, free marketers always come down and cry about how we're destroying the world and we're horrible communists and...

Oh. It's rights that you like that we have to protect! Silly me.
Err, no. Regulation means regulation. It's not hard. You're pulling a classic No True Scottsman here.

The problem here is that you assume "rights" like healthcare, food, and shelter are in fact, rights when they are not. No right can depend on the coercion of another to exist. The right to free healthcare depends on forcing a doctor to care for you, or forcing someone else to pay for it. The right to shelter depends on forcing a builder to build you a shelter, or forcing someone else to pay for it. The right to food requires forcing a farmer and a cook to farm and cook your food, or pay someone else to do it. These are basic human necessities, not rights.

Quote:

"Government regulation hurts the economy."
"What about this?"
"We need to stop that immediately!"
"Isn't that Government regulation?"
"No, because it's protecting individual rights, so it's not TRUE Government regulation."

You're in favor of government regulation too. You just want it to be regulation you like.
I thought you were trying to eliminate the 'Fractional Reserve Banking' effect. Isn't that a rather specific result?

The limit to regulation, should be that which is necessary to protect free people from being defrauded, or harmed.

[Roboramma]

Originally Posted by SaulOhio

That may depend on how loosly you define "regulation". The government's proper role in a free market is to protect rights, such as property rights. Since fractional reserve banking results in inflation, which does rob people's savings of their value, making the practice illegal is a defense of individual rights. Regulation means government doing anything above and beyond such defense of rights.

It seems like you're saying that anything that causes inflation should be made illegal, because it robs people's savings of their value. Is that really what you're saying?

Quote:

I think the defining characteristic that differentiates regulation from legal protection of rights is an attempt to achieve specific outcomes, rather than simply setting basic ground rules and letting the system function on its own.

Look, either you think that fractional reserve banking is a problem because it has negative economic effects, in which case you want regulations so that we can avoid those effects, or you think it's a problem because it violates someone's inalienable rights to not have their money decrease in value. If the latter is a "right", the former doesn't really matter, does it? Either way, we should make this practice illegal.
But your whole point seems to be the former, rather than the latter. Your whole argument is one of regulation for the benefit that it will cause, not the protection of some nebulous rights.

I mean, you think government should limit what banks can do, because those limits would be good for the economy. That's regulation.

[GreyICE]

Originally Posted by Gazpacho

Maybe. Maybe the bank needs to increase its reserves instead. The handwaving is in saying that "money will usually end up going this way" as if it's the only relevant possibility.

It's well understood throughout business that, when determining how much something is worth, you have to subtract out obligations. So I don't see how you can say that money is being created. What happens is that the use of money is allocated over time. Borrowers can use it, and what they are able to buy with it, while depositors don't. They aren't using the same money at the same time.

I start with a blank economic system. Fractional reserve rate 10%, $1,000 in system.

John Q puts $1,000 in a bank. Charley G company takes out a $900 loan. They use it to build a business, which sells widgets.

I have $1,000. The Charley G company has $900. The bank has $100.

Charley G invests in many things, and makes a decent profit. He gives the profit to his employees, who put it in a bank, or spend it (giving to Paul F or Nancy C or something). This puts $900 eventually into a bank (if not through the employees, through the corporations they are purchasing from.

The bank lends out $810 to Ron W corp.

At this point, there has been $1710 dollars of capital investment from the $1,000 deposit. This $1710 has gone into two loans, which were used to build Charley G and Ron W's business. These businesses are permanent economic features, and are capable of generating a more revenue. The economy gained $1710 of value from these two stores ($900 in value from the Charley G store, $810 in value from the Ron W store).

That's a significant economic gain, right there. Charley G has built a $900 business, Ron W has built a $810 business.

That growth would have been impossible without the bank. The best John Q could have done was take his $1,000 and invest it in a business, which would have created $1,000 in economic value to the community. Therefore $1710 of economic dollars (value) exist, and $1,000 was the initial input. $710 in value has been created.

Now imagine that John Q walks into the bank and asks for $1,000?

The banks have $1710 in outstanding debt, but only $190 cash on hand (two inputs). They need $810 quick. That's not a big deal, right? They have $1710 outstanding debt, they need less than half back.

They call up Ron W and Charley G for $400 each from the loan back. Charley G is a responsible business man, he cuts 2 employees, and comes up with the $400. Only now the two employees need their money. They go in and ask the bank for their money - they are out of work, they need it.

The bank just scrambled together $1,000. They need to call in more debt for, say, $300 for these employees. They call up Charley G and Ron W.

Ron W can't absorb this. He's out of business. Now his employees need their money back. Also, Charley G is nearly dead.

This run has collapsed one business and nearly killed another. Now people get worried. They want their money before the banks can't scramble hard enough to find it. They all run into the bank.

Money creation - its advantages and costs.

[Roboramma]

Originally Posted by Tippit

The problem here is that you assume "rights" like healthcare, food, and shelter are in fact, rights when they are not. No right can depend on the coercion of another to exist. The right to free healthcare depends on forcing a doctor to care for you, or forcing someone else to pay for it. The right to shelter depends on forcing a builder to build you a shelter, or forcing someone else to pay for it. The right to food requires forcing a farmer and a cook to farm and cook your food, or pay someone else to do it. These are basic human necessities, not rights.

The right to not be murdered means forcing a police officer to enforce murder laws, or forcing someone else to pay him to do so. The right to a fair trial means forcing a judge to hear your case, or forcing someone else to pay him to do so.

[Francesca R]

Originally Posted by SaulOhio

Those opposed to fractional reserve banking are not necessarily opposed to lending money. Its just that money that is lent out needs to be clearly identified as such.

It already is. Monies you deposit in your current account are lent out with full disclusure. So deal with it

Quote:

Money lent out should first pay for investment instruments like CD's which cannot be withdrawn at will, at least not without a penalty.

You, like Tippit, appear to be unaware of how money-market instruments work. CDs can be traded at any time without penalty.

Quote:

Abolishing fractional reserve banking would not end the practice of lending. It would simply introduce some self-discipline into banking by separating the money available for withdrawal from the money that is lent out.

Suggestion--stuff the money you might need any moment under your mattress. That separates it from what it is lent out.

Oh wait, you are worried your currency is being "debauched" . . . OK then, there is little alternative to you immediately buying all the goods and services that you may need at anytime, and hoarding those now as well. Sorry about those perishable foodstuffs

[AvarianParakeet]

Originally Posted by GreyICE

This run has collapsed one business and nearly killed another. Now people get worried. They want their money before the banks can't scramble hard enough to find it. They all run into the bank.

Money creation - its advantages and costs.

That's one of the reasons for a well structured banking system. In the event of this situation, they could get a quickie loan from another bank to cover the loan. Only a nationwide run would cause said crisis, and such a situation would probably just be preceded by a catastrophe that would place money low on my list of priorities.

[Chaos]

Originally Posted by SaulOhio

That may depend on how loosly you define "regulation". The government's proper role in a free market is to protect rights, such as property rights. Since fractional reserve banking results in inflation, which does rob people's savings of their value, making the practice illegal is a defense of individual rights. Regulation means government doing anything above and beyond such defense of rights.
*snip*

But raising prices also causes inflation. Do you intend to outlaw raising prices as well?

[bobrayner]

Originally Posted by Chaos

But raising prices also causes inflation. Do you intend to outlaw raising prices as well?

Yes! The government must cap the price of every transaction, in order to defend individual rights!

In that case a lot of economic actors would simply choose not to make the transactions. Presumably the government would have to force employees to work without payrises, and force businesses to sell goods & services at a loss, in order to maintain stable prices.

Originally Posted by SaulOhio

I think the defining characteristic that differentiates regulation from legal protection of rights is an attempt to achieve specific outcomes, rather than simply setting basic ground rules and letting the system function on its own.

I'm not sure whether this is immensely ironic or a very bad joke.

[Tippit]

Originally Posted by Roboramma

The right to not be murdered means forcing a police officer to enforce murder laws, or forcing someone else to pay him to do so. The right to a fair trial means forcing a judge to hear your case, or forcing someone else to pay him to do so.

Using that logic, you might as well declare every possible need or want a "right", and then wait for the prosperity to roll in.

Presumably if I have the right to life and the right to protection under the law, I will be capable of providing for my basic necessities, whether it's food, shelter, or health care. If I were an anarchist, I might claim that I can even protect myself without the aid of police and secure private arbitration without the aid of a public legal system to settle differences, but I'm not.

There is also the concept of the difference between codifying a right, and having a legal infrastructure to ensure that right is protected. Even an anarchist might not be quick to waive his right to life, despite his unwillingness to support a police and legal infrastructure. The right may exist in his mind as something endowed by his creator, or it may be merely a secular idea that involves some shared expectation of baseline human behavior towards one another.

In any case it's important to realize that whether you believe basic necessities are "rights" or not, if you expect others to provide these for you, then you must agree to provide them to others, or else you have a condition of servitude.

If you wish government to force your will upon others, then you should be prepared to submit to government force. Even more importantly you should be aware that human nature dictates that power will be abused, and so the more that you require of government, the more abuse you can expect from government.

Since the act of government taxation is independent from the act of receiving a government benefit, and since those who control government have a perpetual incentive to maximize the power of the system of taxation and minimize the system of benefit, it might be constructive to actively limit the scope of government and other coercive entities in our lives.

[Rob Lister]

Originally Posted by Chaos

But raising prices also causes inflation. Do you intend to outlaw raising prices as well?

Nixon did (15Aug71), with dismal results.

[Francesca R]

Originally Posted by bobrayner

In that case a lot of economic actors would simply choose not to make the transactions..

I think that transactions would be outlawed too . . .

"You'll have what you're given, and there won't be much of that!"

[Francesca R]

Originally Posted by Tippit

Using that logic, you might as well declare every possible need or want a "right"

Yeah. The right to own property means forcibly preventing someone from waltzing up and helping themselves to it, or it means forcing other people to pay against their will for the means to forcibly prevent someone waltzing up and helping themselves to your property. The right to a binding contract means forcing someone to honour promises they made even if they no longer feel like it, or it means forcing others against their will to pay for the means to force people to do what they promised to do.
So no way can these things be considered "rights", eh?

[GreyICE]

Originally Posted by Tippit

The problem here is that you assume "rights" like healthcare, food, and shelter are in fact, rights when they are not. No right can depend on the coercion of another to exist. The right to free healthcare depends on forcing a doctor to care for you, or forcing someone else to pay for it. The right to shelter depends on forcing a builder to build you a shelter, or forcing someone else to pay for it. The right to food requires forcing a farmer and a cook to farm and cook your food, or pay someone else to do it. These are basic human necessities, not rights.

Oh this is insane. People don't have the right to get enough food that they're starving in the streets, but it's absolutely essential to outlaw banking to protect the people's rights?

This is insane! Absolutely completely insane!

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The limit to regulation, should be that which is necessary to protect free people from being defrauded, or harmed.

Free to die in the streets? Wow. We have different definitions of free. I think that people can't be free if they're starving, if they have nowhere to live, if they have no access to basic sanitation and basic services.

You apparently think they can't be free if they can deposit money in the bank.

[drkitten]

Originally Posted by Tippit

Using that logic, you might as well declare every possible need or want a "right", and then wait for the prosperity to roll in.

Absolutely. That's another reason that libertarianism fails epically.

Because under libertarianism, either something is a "right" or there's no way for society to enforce a demand for it.

In the real world, you have no right. You have only those privileges which you can negotiate with society to respect, privileges that society will demand payment of some sort for. If you want the right to life, you have the corresponding duty not to murder and to obey society's rules to limit opportunities for murder (such as obeying gun control regulations).

Quote:

Presumably if I have the right to life and the right to protection under the law, I will be capable of providing for my basic necessities, whether it's food, shelter, or health care.

How do you figure this? How are you going to secure "health care" via the "right to life"?
If you were on a desert island, will your "right to life" provide you with a surgeon if your appendix ruptures?

Quote:

Since the act of government taxation is independent from the act of receiving a government benefit, and since those who control government have a perpetual incentive to maximize the power of the system of taxation and minimize the system of benefit, it might be constructive to actively limit the scope of government and other coercive entities in our lives.

Or, alternatively, it might be constructive to take better control of government instead of trying to abolish it completely.

[Francesca R]

Originally Posted by SaulOhio

Since fractional reserve banking results in inflation, which does rob people's savings of their value, making the practice illegal is a defense of individual rights.

Actually, let's not piss about here: shooting in the back a banker who has lent out some of your current account balance ought to be self-defence against an invasion, fully covered by law.
Right?

[lomiller]

Originally Posted by GreyICE

This is insane! Absolutely completely insane!

Come on, I know someone wants to say it…

[Tippit]

Originally Posted by GreyICE

Oh this is insane. People don't have the right to get enough food that they're starving in the streets, but it's absolutely essential to outlaw banking to protect the people's rights?

This is insane! Absolutely completely insane!
Free to die in the streets? Wow. We have different definitions of free. I think that people can't be free if they're starving, if they have nowhere to live, if they have no access to basic sanitation and basic services.

You apparently think they can't be free if they can deposit money in the bank.

Considering that modern banking and government taxation are the two largest contributors to poverty and wealth condensation in the world, protecting people from those evils would go a long way towards helping them feed themselves.

The banks and corporations break people's legs, and the government is there to offer dependency in the form of a crutch called welfare. The system of coercion that funds the welfare is independent of the actual welfare distribution. If the government administrators decide that corporate welfare is more important than social welfare, or if they decide to transform the welfare state into a warfare state, how do you hold them accountable? Not vote them back into office in another four years, after the damage has already been done? Better to accomplish all of this while you guilt the public into thinking they "voted" for it, or the ones responsible.