Fractional Reserve Banking Is Not Fraudulent

[osan]

Bob and Jones want to make a deal. Bob will loan $100 to Jones at 1% per year.

Rather than a fixed term, the loan will be due whenever Bob requests repayment.

It's possible that, when Bob demands repayment, Jones won't have the money (as may happen with any loan).

Is this agreement fraudulent? Should it be illegal?

Of course not, and neither should fractional reserve banking.

When you deposit money in a checking account, you are making a loan to the bank: a loan which you can call in (i.e. "withdraw) at any time. The bank may do whatever it likes with that money (as any borrower can do with the money he borrows). If the bank makes poor decisions, it might not have the money to repay you when you call in the loan. But that's not fraud, that's just default (as can occur with any loan).

Discuss

Boy have you got this bass-ackwards.

Your scenario is not equivalent to the reality of FRB. It is fundamentally different.

Firstly, your scenario represents an agreement at the very least, if not a contract. It is voluntary, whereas FRB is the product of state fiat. We are given no choice in the matter. See what happens when you try paying your taxes with chickens and babka.

"Is FRB faudulent?" is a meaningless question until an aspect is cited for context.

One does not deposit "money" in the bank. Currency != money. FRNs are not money - they meet none of the criteria.

ETA: The question of fraudulence is orthogonal to that of whether it is a valid monetary system, which is the more salient question. FRB may be non-fraudulent (MAY), but it is still invalid as a monetary system. In that sense, actually, it is fraudulent because it is presented as monetary when in fact it is nothing more than empty currency. It is nothing less than counterfeiting. There's the aspect.

 

[wizardwatson]

You might want to do some research before you embarrass yourself again.

Come on, Jamesiv1.

No one likes a sore loser.

 

[wizardwatson]

Repeating your disproved assertions in a sarcastic tone doesn't improve your argument any..

With that, I'm going to go ahead and call it:

wizardwatson, still undefeated, is thread winner.

You might want to do some research before you embarrass yourself again.

I realized years ago, that peaceful people don't want to fight. A good quality no doubt. A Christian quality. But many people thrive in that environment when no one is there to defend.

Rev3 with his snarky comment, isn't an appeal to intellect, or a statement of fact. It's simply a bullying technique. His claim that my "assertions were disproved" is also just an assertion. People act dignified, and respectful, and intellectual, whilst they lie through their teeth.

Bet as the Lord taught, it isn't washed hands, or white robes, or dignity, or respect or intellect that makes a shows a man is upright.

Not that which goeth into the mouth defileth a man; but that which cometh out of the mouth, this defileth a man.

Jamesiv1 does the same thing. He says "you are an embarrassment".

To what? For what?

Because I will not go along with adopting the utopian context in this debate that paints Fractional Reserve Banking in a good light and Ron Paul in a bad light, but instead defend the contemporary context which does the opposite and defends Ron Paul's statement that FRB is fraudulent?

I will gladly embarrass myself for Ron Paul on these and other accounts.

You intellectual posers around here jockeying for the glory of men at the expense of the mission and the message are the real embarrassment.

 

[heavenlyboy34]

Boy have you got this bass-ackwards.

Your scenario is not equivalent to the reality of FRB. It is fundamentally different.

Firstly, your scenario represents an agreement at the very least, if not a contract. It is voluntary, whereas FRB is the product of state fiat. We are given no choice in the matter. See what happens when you try paying your taxes with chickens and babka.

"Is FRB faudulent?" is a meaningless question until an aspect is cited for context.

One does not deposit "money" in the bank. Currency != money. FRNs are not money - they meet none of the criteria.

ETA: The question of fraudulence is orthogonal to that of whether it is a valid monetary system, which is the more salient question. FRB may be non-fraudulent (MAY), but it is still invalid as a monetary system. In that sense, actually, it is fraudulent because it is presented as monetary when in fact it is nothing more than empty currency. It is nothing less than counterfeiting. There's the aspect.

They meet a few-divisibility, recognizibility, durability. It's the key ones that FRNs miss that distinguish them from "money" as you and I and classical economists understand it-a consistent store of value.

 

[Madison320]

Firstly, your scenario represents an agreement at the very least, if not a contract. It is voluntary, whereas FRB is the product of state fiat. We are given no choice in the matter. See what happens when you try paying your taxes with chickens and babka.

How is FRB the product of state fiat? Can't you have FRB without any official fiat currency? And can't you have official fiat currency without FRB?

FRB might amplify the damage of an out of control fiat currency, but there's nothing inherently wrong with it. In fact I'd even say FRB is one of the greatest inventions in history. It's the basis for capitalism. It allows savings to be pooled and loaned out to businesses to invest and increase productivity.

Firstly, your scenario represents an agreement at the very least, if not a contract. It is voluntary, whereas FRB is the product of state fiat. We are given no choice in the matter. See what happens when you try paying your taxes with chickens and babka.

"Is FRB faudulent?" is a meaningless question until an aspect is cited for context.

One does not deposit "money" in the bank. Currency != money. FRNs are not money - they meet none of the criteria.

ETA: The question of fraudulence is orthogonal to that of whether it is a valid monetary system, which is the more salient question. FRB may be non-fraudulent (MAY), but it is still invalid as a monetary system. In that sense, actually, it is fraudulent because it is presented as monetary when in fact it is nothing more than empty currency. It is nothing less than counterfeiting. There's the aspect.

Whoa! Orthogonal! I can't even spell that let alone use it in a sentence.

But why are you trying to equate FRB with money? They are 2 different things.

Suppose we had a perfect libertarian world where various banks offered competing forms of currency. Would you ban banks from offering FRB? Make it illegal?

Actually the more I think about it, would banks even exist without FRB? I don't see how they'd make any money.

 

[wizardwatson]

How is FRB the product of state fiat? Can't you have FRB without any official fiat currency? And can't you have official fiat currency without FRB?

FRB might amplify the damage of an out of control fiat currency, but there's nothing inherently wrong with it. In fact I'd even say FRB is one of the greatest inventions in history. It's the basis for capitalism. It allows savings to be pooled and loaned out to businesses to invest and increase productivity.

"Fractional Reserve Banking is the basis for capitalism"?

and Ron Paul, that commie, thinks it's fraudulent! What a scoundrel!

A loan, and what someone does with a loan are two different things. Loaning excess wealth out is in the bible. It isn't something created by fractional reserve banksters.

Capitalism is not a gift of bankers. That I'm typing that here gives me heartburn a little, but it is what it is.

A person can just as easily use easy credit to...hmmm I don't know...finance a welfare/warfare state and put the future generations under unpayable debt burden, perhaps?, just as easily as "loan to businesses and increase productivity".

 

[osan]

How is FRB the product of state fiat?

Because federal law specifies that a bank must keep 10% of its deposits in hard cash. Must = requirement = mandate = fiat.

Can't you have FRB without any official fiat currency?

Mewonders if you're under a misapprehension of "fiat". Just to be clear:

noun1.an authoritative decree, sanction, or order:a royal fiat.
Synonyms: authorization, directive, ruling, mandate, diktat, ukase.


2.a fixed form of words containing the word fiat, by which a person inauthority gives sanction, or authorization.

3.an arbitrary decree or pronouncement, especially by a person orgroup of persons having absolute authority to enforce it:The king ruled by fiat.


​

And can't you have official fiat currency without FRB?

Sure, but what's your point?

FRB might amplify the damage of an out of control fiat currency, but there's nothing inherently wrong with it.

"Inherently wrong" is irrelevant. What counts are the real-world effects, and those have been endlessly deleterious in a world that continues to respect the false debt that FRNs represent.

In fact I'd even say FRB is one of the greatest inventions in history.

It is one of the greatest tricks ever foisted upon humanity.

It's the basis for capitalism.

You have that quite wrong. Capitalism existed long before any FRB system. Capitalism was based on free markets and REAL WEALTH, much of that represented in gold and silver MONEY. FRNs are false capital. They are lies.

It allows savings to be pooled and loaned out to businesses to invest and increase productivity.

It also allows for unlimited "printing" of currency, particularly the electronic variety, because said FRNs are not money in any sense beyond their status as currency. Put me behind the right keyboard and I can float a quintillion dollars in minutes. FRNs are pure, unvarnished bullshit that represent not wealth in any way demonstrable, but rather pure debt. They are one of the biggest scams going.

But why are you trying to equate FRB with money? They are 2 different things.

Nowhere have I done so in any way imaginable.

Suppose we had a perfect libertarian world where various banks offered competing forms of currency. Would you ban banks from offering FRB? Make it illegal?

You are synthesizing conditions that have no basis in reality. FRB is mandated by the fedgov. That is a fact. FRNs are nothing at all, save currency that people use because they are told to. They have zero inherent value because they are literally nothing, save for M1 notes, which are just pieces of paper.

Actually the more I think about it, would banks even exist without FRB?

You cannot be serious. Banks have been in existence for centuries prior to any notion of FRB.

I don't see how they'd make any money.

Then you need to do some reading.

 

[osan]

The six characteristics of money are

1. divisibility
2. durability
3. portability
4. acceptability
5. uniformity
6. limited supply

Money acts as a unit of account, a medium of exchange and a store of value.

They meet a few

True, but the definition of "money" specifies an "and" relationship between the elements. IOW, they are all necessary qualities, the absence of any one rendering the commodity in question as a non-candidate. I grant that the specific definitions of each element remain vague, so far as I can see, but if we step back from utter rigor, we may still arrive at good rules of thumb by which to judge specific candidates.

FRNs are not divisible. Cut a $1 bill in half and you have nothing likely to be workable, save to tape them back together and hope someone will accept them.

"Durability" is a bit less clear, but when compared with gold and silver, they are not terribly durable.

FRNs are portable, so they clearly meet that requirement.

They are acceptable... though the reasons for which are not always clear. If acceptability arises out of the absence of other choices by no other virtue than governmental coercion, then I would call that a failure to meet the requirement.

They are uniform.

And for the money shot, they are not limited in supply in principle. They may be issued in arbitrary volume, something that cannot happen with gold and silver... at least not today. Perhaps one day I will be able to talk at a hole in the wall and yak, "gold, five kilograms, hot" and it appears as if by magic. Until that time, money will remain necessary to prosperous economic conditions.

FRNs are debt instruments, which by definition disqualifies them as money.

 

[heavenlyboy34]

The six characteristics of money are

1. divisibility
2. durability
3. portability
4. acceptability
5. uniformity
6. limited supply

Money acts as a unit of account, a medium of exchange and a store of value.



True, but the definition of "money" specifies an "and" relationship between the elements. IOW, they are all necessary qualities, the absence of any one rendering the commodity in question as a non-candidate. I grant that the specific definitions of each element remain vague, so far as I can see, but if we step back from utter rigor, we may still arrive at good rules of thumb by which to judge specific candidates.

FRNs are not divisible. Cut a $1 bill in half and you have nothing likely to be workable, save to tape them back together and hope someone will accept them.

"Durability" is a bit less clear, but when compared with gold and silver, they are not terribly durable.

FRNs are portable, so they clearly meet that requirement.

They are acceptable... though the reasons for which are not always clear. If acceptability arises out of the absence of other choices by no other virtue than governmental coercion, then I would call that a failure to meet the requirement.

They are uniform.

And for the money shot, they are not limited in supply in principle. They may be issued in arbitrary volume, something that cannot happen with gold and silver... at least not today. Perhaps one day I will be able to talk at a hole in the wall and yak, "gold, five kilograms, hot" and it appears as if by magic. Until that time, money will remain necessary to prosperous economic conditions.

FRNs are debt instruments, which by definition disqualifies them as money.

There is some truth to that. BUT, there is always the chance that someone could discover a new vein or devise a way to flood the market with coinage. (or perhaps scheme to do so) That would be bad for savers expecting the purchasing power of their holdings to at least remain steady.

 

[Madison320]

"Inherently wrong" is irrelevant. What counts are the real-world effects, and those have been endlessly deleterious in a world that continues to respect the false debt that FRNs represent.

I totally agree about FRNs but that's a whole other argument.

Suppose a libertarian country's free market ended up using gold as money, no electrons, just to keep things simple. Bob opens up a bank and you deposit 100 ounces of gold into his newly formed bank with the agreement that Bob can loan that gold out. Isn't that fractional reserve banking? Would you make it illegal?

 

[heavenlyboy34]

I'm confused. What's an FRN?

Federal Reserve Note. AKA the modern "dollar".

 

[Madison320]

Federal Reserve Note. AKA the modern "dollar".

Thanks, yeah I was having an Aleppo moment, we were talking about FRB and he started mixing in FRN. Actually that's part of the problem. He makes it sound like the two are permanently connected somehow. I'm pretty sure we had fractional reserve banking well before the federal reserve was even created. Didn't we have the fractional reserve banking during the industrial revolution? While we were on a gold standard before the federal reserve?

 

[nobody's_hero]

Yes, I understand why people would want a lighter placeholder for gold, with a gold standard. And yes, I agree that no government compulsion would be required to use banknotes with a gold standard. I guess I didn't fully understand why people accept banknotes today, without a gold standard.

I don't think that Griffin is attacking fractional reserve banking. What Griffin is attacking is a fiat currency that is not tied to gold. That currency, when loaned out, is less then the amount owed with interest. And yes, it would be the same in a free market economy, but the difference is that in a free market economy with a gold standard, wealth is practically unlimited, because any object of value could be traded for bank notes in order to repay the bank or you landlord. I feel that is largely discouraged today, because having, for example, cows or a carved piece of furniture is not seen to be as valuable as banknotes, because ultimately it is whether or not you have banknotes to pay your debt that determines if men with guns are going to take your house, hence the fiat currency.

In your two situations, I am interpreting them as though the money in question is fiat and not backed by gold, since that is the issue that I think Griffin (and Ron Paul) have with banking practice. In the first situation, Bob gets the extra thousand by exerting human effort to do a job. The money he gets paid to do that job comes from the extra money he is paying each month to the bank, because the bank will pay somebody with that extra money and that extra $80 in the economy will eventually be paid to Bob. He then uses that money to pay his debt (or interest) the next month, and the cycle continues. All that is really happening is that Bob is performing labor for no net gain, hence the modern day serfdom.

The second situation is a bit different because Bob 2 is not borrowing bank notes from his landlord. He is not borrowing bank notes at all. He owes money for a service (the provision of shelter). Essentially, though, his income comes from the bank, which is given to the landlord, which is given to the bank.
"No matter where you earn the money, its origin was a bank and its ultimate destination is a bank. The loop through which it travels can be large or small, but the fact remains all interest is paid eventually by human effort."
The difference in the two scenarios is that Bob 2 does not owe interest on money created out of thin air. The money that he earns and pays is most likely the interest money that Bob 1 has to pay every month - the money reaching Bob 2 is just another step in a "large loop".

I'm kind of disappointed that this branch of the discussion died off because I've always been quite curious about the relationship between interest and inflation.

Let's say there's $10,000 "Liberty Bucks" printed by Libertarian Bank (assuming we go back in time to the days when private banks could issue their own notes), that's all the Libertarian bank notes that exist in the economy because Libertarian Bank is the only bank that can issue its notes (anything else is from "other bank"), and they loan $10,000 in Liberty Bucks to Bob on the condition that he pays back $11,000 Liberty Bucks by the end of the year. Where does that extra grand come from, if not from Libertarian Bank, and why would a bank loan money at interest, if it has to print more money to get paid back, which effectively devalues the original $10,000? I mean, think about it, why does it even work? Does interest itself inherently cause, or at least, require there to be inflation in order to work? I can't really pay you back something you loan me with interest, if what you gave me in the loan is all that exists.

It would seem to me that if you wanted a truly strong currency, you'd have to ban interest, and maybe even set fire to a few dollar bills every now and then for good measure. I mean, maybe Bob could simply shred, burn, destroy half of what he borrowed and then repay the bank $5,000 expecting to be thanked for effectively doubling the value of their currency, lol.

EDIT, Maybe it's only complicated by the existence of fiat currency backed by nothing, but it does make you wonder even more about how the people running our money system have managed to make it work when it doesn't seem to make any sense at all.

 

[osan]

I'm kind of disappointed that this branch of the discussion died off because I've always been quite curious about the relationship between interest and inflation.

Let's say there's $10,000 "Liberty Bucks" printed by Libertarian Bank (assuming we go back in time to the days when private banks could issue their own notes), that's all the Libertarian bank notes that exist in the economy because Libertarian Bank is the only bank that can issue its notes (anything else is from "other bank"), and they loan $10,000 in Liberty Bucks to Bob on the condition that he pays back $11,000 Liberty Bucks by the end of the year. Where does that extra grand come from, if not from Libertarian Bank, and why would a bank loan money at interest, if it has to print more money to get paid back, which effectively devalues the original $10,000? I mean, think about it, why does it even work? Does interest itself inherently cause, or at least, require there to be inflation in order to work? I can't really pay you back something you loan me with interest, if what you gave me in the loan is all that exists.

It would seem to me that if you wanted a truly strong currency, you'd have to ban interest, and maybe even set fire to a few dollar bills every now and then for good measure. I mean, maybe Bob could simply shred, burn, destroy half of what he borrowed and then repay the bank $5,000 expecting to be thanked for effectively doubling the value of their currency, lol.

EDIT, Maybe it's only complicated by the existence of fiat currency backed by nothing, but it does make you wonder even more about how the people running our money system have managed to make it work when it doesn't seem to make any sense at all.

What you describe here I was going to go into and forgot. It is a "problem" of sorts, when stated in this way, and makes clear that human economies are far from perfect.

That said, some are closer to perfection than are others. The whole notion of "store of value" tends toward the arbitrary. In his sense, the architecture of the FRN system of currency is really no worse than any other. Some will bristle at this, but it stands true nevertheless.

The real problem with our economic systems, specifically with the monetary representations of value, is that they are all arbitrary. Calling gold "inherently valuable" is FAIL because it gives no context. Gold is not valuable in itself until a context is given. As food, gold is utterly valueless. Anyone doubting this, I suggest you put 10 ozt. of small gold coins in your pocket, go three days without eating, and then consume your coins in the attempt to sate your sunken-eyed desire. The result, I am confident, will be no satiation, later accompanied by a rather interesting court upon the throne, some hours later.

Shift context to electrical conductors. In the semiconductor business, gold has immense inherent value because of its immunity to corrosion and its superb conductivity properties.

By this simple example we see the central importance of context, as well as just how hollow-ringing is the sans-context assertion that says "gold is inherently valuable".

So where, then, does the FRN-based system fail? In its management, for one, which has been either inept, dishonest, or both. But the real bugger is the fact that the FRN represents no value whatsoever, but only debt. Every FRN that has been issued, save those of recent vintage at 0%, attaches with the interest to which you refer. It is, therefore, inherently a debt instrument. There is literally NOTHING backing the FRN, save people's acceptance, which I will blindly assert is insufficient to the longer term viability of the instrument.

The exact same problem, however, exists with gold. Imagine the bank issues you every last ounce of gold coin on the planet. Let us say is it 100 ozt. There are no other coins extant. The term is one year at 1% uncompounded. Therefore, when the note comes due, you must present 101 ozt of gold in payment of the debt. Where will the other ozt come from? You may find that much gold by panning for it. But if it proves not forthcoming, there is a problem and the lender may be forced into making a choice to accept other valuables in lieu of the extra ounce. This is all part of the vicissitudes of economic life and the risks that partly comprise the overhead of all human transaction. Shit happens, and there are always other commodities of value that may substitute for those specified in any given contract. That is why banks accept liens on real property when giving mortgages. It best assures they do not take it in the neck in the event the lender is unable to repay.

The whole concept of money carries several shortcomings inherent to it. Nevertheless, "proper" money remains the best we have been able to do thus far. The only deliverance from the problems of money that I can see lies in crossing some developmental threshold with our technologies. But lest one fall for the delusory notion that even Star Trek-style, talk-at-a-hole-in-the-wall-and-get-what-you-want technology would solve all man's problems, rest assured it would not. It would, however curative it proved of some of the worst troubles we currently face, give rise to a whole new host of problems. Why? Because human beings of the Empire ilk have thus far proven never to be satisfied with what they have, no matter how good. It is an adopted mindset that drives a vast number of men to always press the boundaries, which in itself has proven very much a two-edged sword. And make no mistake about it: it is LEARNED BEHAVIOR. The very environment to which Empire gives rise leads the individual toward FAIL. It is in the very nature of the arrangement that people decay from the noble potential of the newborn, to the avariciously vicious adult, covetous of all he cannot have and never satisfied with that which is at hand. It is the "he who dies with the most, wins" mentality of the lowest among us (think of men like Gates). They bring forth miracles of sorts, but ones to which there attaches great price, our individual equilibrium perhaps the greatest sacrifice of them all.

Given all this, the world is what it is, and despite the mania of humanity running amok each individual retains the potential for a life worth the living. A great determinant in that equation lies in the freedom to carve for oneself a life of prosperity as he may define it. A prime element of that equation is economic freedom and that means access to money, which in turn leads to the importance of a sound medium of exchange. It is far from perfect, but it is the best we primitive humans have been able to concoct, to date.

 

[not.your.average.joe]

I'm kind of disappointed that this branch of the discussion died off because I've always been quite curious about the relationship between interest and inflation.

Let's say there's $10,000 "Liberty Bucks" printed by Libertarian Bank (assuming we go back in time to the days when private banks could issue their own notes), that's all the Libertarian bank notes that exist in the economy because Libertarian Bank is the only bank that can issue its notes (anything else is from "other bank"), and they loan $10,000 in Liberty Bucks to Bob on the condition that he pays back $11,000 Liberty Bucks by the end of the year. Where does that extra grand come from, if not from Libertarian Bank, and why would a bank loan money at interest, if it has to print more money to get paid back, which effectively devalues the original $10,000? I mean, think about it, why does it even work? Does interest itself inherently cause, or at least, require there to be inflation in order to work? I can't really pay you back something you loan me with interest, if what you gave me in the loan is all that exists.

It would seem to me that if you wanted a truly strong currency, you'd have to ban interest, and maybe even set fire to a few dollar bills every now and then for good measure. I mean, maybe Bob could simply shred, burn, destroy half of what he borrowed and then repay the bank $5,000 expecting to be thanked for effectively doubling the value of their currency, lol.

EDIT, Maybe it's only complicated by the existence of fiat currency backed by nothing, but it does make you wonder even more about how the people running our money system have managed to make it work when it doesn't seem to make any sense at all.

I think the way the banks have gotten it to work is by not demanding the $11,000 at the end of the year. That would be impossible to do, and the banks know that, so they set up a payment plan in which Bob pays back $833.33 each month with 10% interest, adding another $83.33. So Bob is supposed to pay the bank $916.66 every month. Well, it is assumed he can do that, at least at first. Sometime during the year, he will realize that by the time the 11th month comes around, he won't have any money left to pay back the loan with interest. So, he gets a job to earn the rest. But what will that accomplish, if there are no other Liberty Bucks? The Libertarian Bank also knows that Bob can't pay his debt, so, with the extra $83.33 they are getting each month from Bob as interest, they pay Bill $83.33 to do a job for them, thereby releasing the interest money back into the economy. Eventually Bob will get his hands on that money, because he needs Liberty Bucks and those are the only other ones in existence. And the way he gets that money is through a job, aka human effort.
So Bob gets his money back and pays the bank his debt for the 11th and 12th months. Now, if you were paying attention to Bob's year you may be wondering, "But the total amount of money he pays the bank (the $11,000) doesn't actually make the bank any money, because although Bob paid $11,000, there are still only $10,000 Liberty Bucks in existence. So why does the bank charge interest at all?"
This is one of the keys to FRB. Because although the bank doesn't make any gain in Liberty Bucks, the bank does get some service done by Bill for $83.33 a month. And that may sound alright for the bank, and actually for Bill, because eventually Bob will do a service for Bill worth $83.33 a month. So, Bill is getting service for his service to the bank. But what about Bob? He had to do service for Bill, and all he got in return was the Liberty Bucks that he already paid to the bank, which he then must pay to bank. So interest ensures that debtors are kept in a sort of indentured servitude to the bank, because they have to get a job, either for the bank or for someone who worked for the bank. And it is through this FRB and interest that Bob and Bill (who don't have to be different people) become modern serfs.

Now here's a puzzle for you. Why did Bob need to take a $10,000 loan from the bank in the first place? Who did he need to pay that would only accept Liberty Bucks, and why? In today's system, Bob needs to pay the government for taxes. Because the government demands money or will threaten force, and they will only accept Liberty Bucks. And those Liberty Bucks are worth something to the government, because it can demand people accept them in return for service by claiming it will demand the Bucks back at some future date. And all this is possible through the threat of force.

Here's another puzzle. If Bob pays back his loan of $833.33 with an additional $83.33 each month, he hasn't actually used the money for anything. He must have borrowed it for something, but my story only accounts for Bob borrowing money for the sole sake of paying it back. This throws another twist into the story, but it is not a new twist. The only thing that happens after Bob uses the money for something other than paying it back, is that more people have to perform work for other people so that the Bucks eventually get back to either the bank or to Bob.

Consider this. The Libertarian Bank can print as many Liberty Bucks as it wants, but that money is not worth anything in the vaults. That money can't buy them anything from anyone unless the person they pay needs those Liberty Bucks to pay debt, or 'imaginary debt' to the government for owning a house or for buying goods. So money is actually debt under today's circumstances.

 

[kfarnan]

it's a game of manipulated control. They don't really need the fiat, since they can print it. It is a place of power they want.

 

[Jamesiv1]

Come on, Jamesiv1.

No one likes a sore loser.

If you don't love this country you can get the hell out.

 

[wizardwatson]

If you don't love this country you can get the hell out.

To truly love someone or something, you must rebuke it when it does evil. If you don't, that means in your heart you hate it.

Thou shalt not hate thy brother in thine heart: thou shalt in any wise rebuke thy neighbour, and not suffer sin upon him. Lev 19:17

But thank you for your pearls of wisdom anonymous poster.

 

[Madison320]

There's a video, I think it's called Money Masters, where the guy incorrectly describes fractional reserve banking. He describes a situation where the bank issues more bank notes than what the bank has in deposits and calls that fraction reserve banking. That's actually counterfeiting. Maybe that's the source of confusion?

 

[wizardwatson]

There's a video, I think it's called Money Masters, where the guy incorrectly describes fractional reserve banking. He describes a situation where the bank issues more bank notes than what the bank has in deposits and calls that fraction reserve banking. That's actually counterfeiting. Maybe that's the source of confusion?

The source of confusion has been pinpointed already. There is a fundamental disagreement about whether a deposit in a bank transfers ownership or not. "Legally" now it does, prior to 1800's it was not decided by law.

Therefore, the question of whether FRB is fraud will stem from a combination of your stance on the ownership issue, and whether you wish to focus on the contemporary implementation of FRB, or an imagination of FRB operating in a libertarian utopia.

I'm sure you can see why I was decleared thread-winner. I have no confusion.