Banking Is Not Evil

[Acala]

As MRocked said, if that's what the agree to, then I don't see how it is either.

Let's separate out the fiat currency aspect of it, which you bring up. Say the government didn't issue fiat currency. You still think there should be laws requiring banks to hold 100% reserves?

When you open a checking account, do you agree that the bank may not actually honor your checks because it doesn't keep your money on deposit? I can't imagine that ANYONE thinks that is part of the deal when they deposit money in a checking account. So the banks enter into a deal with you in which your expectation is that your money will be held for you and available anytime you want it but the bank knows that this might not be the case because it in fact does NOT keep your money available for you. That is deceit for profit, hence fraud.

 

[TaftFan]

Those who want to ban FRB are not only statists, they are also fairly ignorant.

 

[kcchiefs6465]

As MRocked said, if that's what the agree to, then I don't see how it is either.

Let's separate out the fiat currency aspect of it, which you bring up. Say the government didn't issue fiat currency. You still think there should be laws requiring banks to hold 100% reserves?

I did address part of this in post #20 as in post #17 I misspoke. If people wanted to be paid in BTC or gold or food or whatever, they ought to be able to. That is first and foremost a natural right respecting the Law that you own yourself and that which you produce. Whatever they ask for, so long as my rights are not infringed upon, I have no problem with. I very well might not accept what they are paid with, though, as is my natural right to do so.

The issue of fractional reserve banking being outlawed, that is more of a complicated question. It is immoral. Assuming the Fed was ended, I wouldn't necessarily be pro-outlawing of fractional reserve banking. If people understood the way their bank, which loaned out more than had in reserves, did business, they certainly would not use their services. And the money in which the bank transacted would be hesitantly accepted by others. If they were issuing more bills of credit for gold than they had for example, as the uncertainty of ever collecting payment is a valid concern. I think it would come down to the banks carrying their own private insurance and the insurance company looking into how the bank did business. If their model was too risky the insurance company would not cover them and the people could know that that bank was operating riskily and avoid them.

That's a good question though. I would have to think about how exactly it would all work before I could definitively say one way or the other. Generally speaking I am against any additional legislation. Whether fractional reserve banking would constitute fraud in the above example, I don't think, but could perhaps be persuaded otherwise. As it stands today I am forced to transact in dollars. There is no question that that is immoral considering their record of maintaining the value thereof and limiting the severity of recessions. (an all in all failed record.. all things considered)

 

[kcchiefs6465]

Those who want to ban FRB are not only statists, they are also fairly ignorant.

While your fourteen word explanation has been taken into consideration, forgive me if I'm not particularly persuaded by your argument.

 

[dannno]

As MRocked said, if that's what the agree to, then I don't see how it is either.

Why is the bank allowed to loan out money they don't have and collect interest on it, but if I do the same thing I go to a Federal Penitentiary???

Once again, if you live under tyranny you are going to agree to things that are unfair, immoral and dishonest if it is perceived to be your best option considering the circumstances...

I'm pretty sure slaves would have signed slave contracts if part of the terms were that they had slightly more rights. Now you are going to tell me that they would then be 'agreeing' to be enslaved so it wouldn't be immoral anymore? Completely illogical.

 

[kcchiefs6465]

When you open a checking account, do you agree that the bank may not actually honor your checks because it doesn't keep your money on deposit? I can't imagine that ANYONE thinks that is part of the deal when they deposit money in a checking account. So the banks enter into a deal with you in which your expectation is that your money will be held for you and available anytime you want it but the bank knows that this might not be the case because it in fact does NOT keep your money available for you. That is deceit for profit, hence fraud.

This.

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.- Henry Ford

If given the choice, no one would choose to save their money in a bank which operated fractionally. Someone will get left holding the bag if there is a run. Generally speaking that has been the American people. It wouldn't be if I had anything to say about it. TBTF would indeed fail. I like Andrew Jackson in that respect.


Excerpted from: It is Dangerous to Be Right When the Government is Wrong by Andrew Napolitano. All rights to the author and publisher.

The Second Bank of the United States was chartered by James Madison. This second bank's life only lasted until 1833, when President Andrew Jackson allowed the charter to expire after a bank panic. Jackson faced the hard decision of letting banking institutions fail, causing unemployment in the short term, or bailing them out with the central bank system, causing erosion in the value of the nation's currency in the long term. He explained to the managers of the bank:

Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families and that would be my sin! You are a den of vipers and thieves. (Emphases in original)

Amen!

 

[donnay]

Tired of your pricks telling me I am evil for supporting banks. You should go screw yourself.

Sincerely,

Slutter McGee

I empathize with your denial--we have all been sucked into the evil, one way or another. Most of us were born with the evil so it is hard to understand life without the evils.

The government went after loan sharks and the mob for usury--but it is okay for them and their corporate cronies to do? I realized government's cronies hate competition and they use the government to control anyone who tries to work around them.

 

[pcosmar]

If the customers agree to the terms when they choose to deposit money in a bank, what's the problem?

Fraud and Theft are OK if they are agreed to? (under false pretenses)

 

[Danke]

http://www.lewrockwell.com/2012/07/ron-paul/ron-pauls-parthian-shot/

 

[Danke]

http://www.ronpaulforums.com/showthread.php?228913-Quotations-On-banking-money-freedom-and-liberty

 

[Sonny Tufts]

When you open a checking account, do you agree that the bank may not actually honor your checks because it doesn't keep your money on deposit? I can't imagine that ANYONE thinks that is part of the deal when they deposit money in a checking account. So the banks enter into a deal with you in which your expectation is that your money will be held for you and available anytime you want it but the bank knows that this might not be the case because it in fact does NOT keep your money available for you. That is deceit for profit, hence fraud.

A checking account isn't the same thing as a safety deposit box agreement. No checking account contract states that the deposited funds will always remain in the bank's hands. So when you make a deposit to your checking or savings account, the bank is a debtor -- it owes you the amount of your deposit, which you may demand at any time (subject to any deposited checks clearing). There is no fraud, only a total misapprehension of how things work.

 

[erowe1]

When you open a checking account, do you agree that the bank may not actually honor your checks because it doesn't keep your money on deposit?

Of course.

I can't imagine that ANYONE thinks that is part of the deal when they deposit money in a checking account.

You have to be kidding. You think people don't know that banks loan out the money people deposit there?

So the banks enter into a deal with you in which your expectation is that your money will be held for you and available anytime you want it but the bank knows that this might not be the case because it in fact does NOT keep your money available for you. That is deceit for profit, hence fraud.

The bank has insurance that guarantees your ability to get back money up to a certain amount. People whose accounts are larger than that are taking a risk. This isn't some secret. The banks aren't being deceptive about it.

 

[erowe1]

The issue of fractional reserve banking being outlawed, that is more of a complicated question. It is immoral. Assuming the Fed was ended, I wouldn't necessarily be pro-outlawing of fractional reserve banking. If people understood the way their bank, which loaned out more than had in reserves, did business, they certainly would not use their services. And the money in which the bank transacted would be hesitantly accepted by others. If they were issuing more bills of credit for gold than they had for example, as the uncertainty of ever collecting payment is a valid concern. I think it would come down to the banks carrying their own private insurance and the insurance company looking into how the bank did business. If their model was too risky the insurance company would not cover them and the people could know that that bank was operating riskily and avoid them.

That's a good question though. I would have to think about how exactly it would all work before I could definitively say one way or the other. Generally speaking I am against any additional legislation. Whether fractional reserve banking would constitute fraud in the above example, I don't think, but could perhaps be persuaded otherwise. As it stands today I am forced to transact in dollars. There is no question that that is immoral considering their record of maintaining the value thereof and limiting the severity of recessions. (an all in all failed record.. all things considered)

I agree with this explanation.

And I still don't think fractional reserve banking is immoral. Without being propped up by a government, then it probably wouldn't be a successful business model. If so, the market would take care of it. But if people willfully enter contracts with one another in a free market that involve fractional reserve banking, then that's their right.

 

[kcchiefs6465]

The bank has insurance that guarantees your ability to get back money up to a certain amount. People whose accounts are larger than that are taking a risk. This isn't some secret. The banks aren't being deceptive about it.

The people who will pay the guarantee is collectively the people themselves. The lender of last resorts (Fed) will cover their asses and inflation will rise.

Yes, you may be paid the total dollars that you had in the bank, their worth will be substantially less.

It is very much so deceptive to lend out more money than you have. If there is a bank run someone will be left holding the bag.

 

[mosquitobite]

Interested in how the pro-banks think about this story:
http://rt.com/business/man-outsmarts-banks-wins-court-221/

 

[dannno]

I agree with this explanation.

And I still don't think fractional reserve banking is immoral. Without being propped up by a government, then it probably wouldn't be a successful business model. If so, the market would take care of it. But if people willfully enter contracts with one another in a free market that involve fractional reserve banking, then that's their right.

You haven't addressed my point at all.

If they had fractional reserve banks in the German concentration camps and that was their only option, are they really agreeing to use them or are they merely using them because it is their best option?

Why do I go to prison if I counterfeit money and loan it out but banks are legally allowed to do this?

Why is it on this topic you seem to not comprehend what tyranny is?

 

[heavenlyboy34]

I agree with this explanation.

And I still don't think fractional reserve banking is immoral. Without being propped up by a government, then it probably wouldn't be a successful business model. If so, the market would take care of it. But if people willfully enter contracts with one another in a free market that involve fractional reserve banking, then that's their right.

+rep Free banking FTW. That way, people can choose 100% reserve banks if they so desire. (I don't see them existing except maybe as non-profits, though...banks that don't lend reserves aren't really "banks"-they're elaborate security boxes)

 

[MRoCkEd]

When you open a checking account, do you agree that the bank may not actually honor your checks because it doesn't keep your money on deposit? I can't imagine that ANYONE thinks that is part of the deal when they deposit money in a checking account. So the banks enter into a deal with you in which your expectation is that your money will be held for you and available anytime you want it but the bank knows that this might not be the case because it in fact does NOT keep your money available for you. That is deceit for profit, hence fraud.

I absolutely know the bank lends out deposits. I voluntarily accept the terms in exchange for a place to deposit my money with some interest.

Yes, if everyone demanded full withdrawal of deposits today, the banks would be unable to fulfill that request. But the same is true if everyone with an insurance policy filed a claim at once; the insurance companies would go bankrupt.

If you really want 100% reserves, use a safety deposit box.

 

[erowe1]

The people who will pay the guarantee is collectively the people themselves. The lender of last resorts (Fed) will cover their asses and inflation will rise.

I agree. The government shouldn't be involved.

 

[erowe1]

You haven't addressed my point at all.

If they had fractional reserve banks in the German concentration camps and that was their only option, are they really agreeing to use them or are they merely using them because it is their best option?

Why do I go to prison if I counterfeit money and loan it out but banks are legally allowed to do this?

Why is it on this topic you seem to not comprehend what tyranny is?

I don't see how I failed to address it. Obviously if people are in concentration camps, the state is involved.