Is the US national "debt" an illusion?

[Mocking You]

How many times will I have to repeat for you that I understand the "difference" that we have all collectively fallen for.

We haven't collectively fallen for an inaccurate definition of "loan" and "investment". There is a real difference, and it's not the distribution of risk.

How long will it take for you to recognize that the only difference is the distribution of risk?

When should I accept a falsehood? Never.

 

[Mocking You]

You agree with what I said earlier then. Fractional Reserve is fraud.

It's the accepted practice of banking for centuries. It works.

It is also counterfeiting. More importantly, you defend it as a valid system equal to righteousness.

It's not counterfeiting. And don't make up stuff in your head--I never said it was righteousness, I said it wasn't sinning.

Translation: It is government approved, therefore acceptable.

There you go again, making stuff up in your head. There's a a word for that.

You never answered my question--Do you have a checking account or a savings account? Do you have a mortgage?

 

[PureX]

What you see as "exploitation" is actually two adults entering into an agreement which each sees as benefiting them and increasing their welfare (for else they wouldn't enter into the agreement).

We could define prostitution and dope-dealing in exactly the same way. And yet most of us would agree that prostitution and dope-dealing are grossly exploitive, to the point where most of us consider them criminal activities.

You pretty much are wanting to treat borrowers like children. Too stupid to understand what is in their own best interests. Very patronizing.

Exploitation takes advantage of any vulnerability, not just childishness.

Lenders exploit other people's desire to better themselves economically, for profit, by getting them to agree to repay investment capital, with interest, regardless of any and all other circumstances. And they even require "collateral" so they can punish (and/or recoup from) anyone who does not or cannot repay them with interest. Thus, they place ALL the risk on the borrower, and accept NONE of the risk, themselves. And yet they demand a profit, regardless.

This is not a fair business practice; it is exploitation masquerading as business. And sadly, we in the U.S., as in most places on Earth, do not understand or recognize the difference between commerce and exploitation. We think they are one and the same. Which is why so many human beings are suffering, all over the world, as a result of what we call "commerce".

 

[Nimrod]

It's the accepted practice of banking for centuries. It works.

There you go again. Fractional Reserve is acceptable.
Murray Rothbard correctly pointed out it is counterfeiting and therefore should be abolished.

fractional reserve banks … create money out of thin air. Essentially they do it in the same way as counterfeiters. Counterfeiters, too, create money out of thin air by printing something masquerading as money or as a warehouse receipt for money. In this way, they fraudulently extract resources from the public, from the people who have genuinely earned their money. In the same way, fractional reserve banks counterfeit warehouse receipts for money, which then circulate as equivalent to money among the public. There is one exception to the equivalence: The law fails to treat the receipts as counterfeit.

Read it again. You didn't get it the first time.

You never answered my question--Do you have a checking account or a savings account? Do you have a mortgage?

What an idiotic set of questions! Is this guilty by association? Do I pay into SS when I know it is a pyramid scheme and it is wrong? Medicare? Stealing from one group to another?
Do you really think I have a choice?

 

[Nimrod]

It's the accepted practice of banking for centuries. It works.

It works for a time. Each and every fiat system ended to be worthless.

 

[Tinark]

We could define prostitution and dope-dealing in exactly the same way. And yet most of us would agree that prostitution and dope-dealing are grossly exploitive, to the point where most of us consider them criminal activities.
Exploitation takes advantage of any vulnerability, not just childishness.

Oh please, give me a break. Buying a home and taking out a mortgage is like being a prostitute?

Lenders exploit other people's desire to better themselves economically, for profit, by getting them to agree to repay investment capital, with interest, regardless of any and all other circumstances.

They are fulfilling a need or desire and incurring a cost to do so (the lenders' cash balance is reduced, and it takes time and effort to process a loan). Why should they not be compensated for that like everyone else?

And they even require "collateral" so they can punish (and/or recoup from) anyone who does not or cannot repay them with interest. Thus, they place ALL the risk on the borrower, and accept NONE of the risk, themselves. And yet they demand a profit, regardless.

Not all loans require collateral. Have you never signed up for a credit card before? And, have you been living under a cave the past 7 years? Did the real estate market bust completely pass you by, where we saw clear as day that even mortgage lenders, with supposedly solid real estate collateral, are indeed exposed to risk.

Regardless, when there is no risk, the interest payments are _lower_ since there will be more lenders willing to lend to the borrower. It then becomes a competition on who is willing to lend out the money for the lowest possible acceptable amount until there are no offers remaining.

This is not a fair business practice; it is exploitation masquerading as business.

Ridiculous. The competition among lenders keeps things fair.

And sadly, we in the U.S., as in most places on Earth, do not understand or recognize the difference between commerce and exploitation.

Fortunately, we do know the difference. It's partly how we were able to avoid becoming a communist hell hole that plagued much of the world during the 20th century.

We think they are one and the same. Which is why so many human beings are suffering, all over the world, as a result of what we call "commerce".

Access to loans and credit does not cause suffering. In fact, it alleviates it. It is the inability of responsible adults to access credit when one has a need for it or when it is a better option than alternatives that increases human misery and suffering.

 

[Mocking You]

There you go again. Fractional Reserve is acceptable.
Murray Rothbard correctly pointed out it is counterfeiting and therefore should be abolished. Read it again. You didn't get it the first time.

When the U.S. was under the gold standard in the 1800's, they used fractional reserve banking to make loans. In your world view that was counterfeiting, correct?

 

[Tinark]

When the U.S. was under the gold standard in the 1800's, they used fractional reserve banking to make loans. In your world view that was counterfeiting, correct?

To call it counterfeiting is to redefine terms and use language in an Orwellian manner for ideological purposes. Nice job in combating this nonsense, by the way.

 

[Mocking You]

It works for a time. Each and every fiat system ended to be worthless.

Oh my. I think I've figured out why you are giving nonsensical responses. You think fractional reserve banking = Federal Reserve banks.

:kookoo: :dunce:

:rotfl: :darwinsm:

 

[Mocking You]

Nice job in combating this nonsense, by the way.

Kudos to you as well.

 

[Tinark]

Oh my. I think I've figured out why you are giving nonsensical responses. You think fractional reserve banking = Federal Reserve banks.

:kookoo: :dunce:

:rotfl: :darwinsm:

Indeed - fractional reserve banking is not a feature of fiat money systems but rather a feature of banking and lending in general under any money system (private or government, gold or fiat). In fact, that banks have to set aside a specific amount of reserves at all is due to government regulation - regulation which these Rothbardian anarcho-capitalists should object to if they were in any way consistent.

 

[Mocking You]

Indeed - fractional reserve banking is not a feature of fiat money systems but rather a feature of banking and lending in general, under any money system (private or government, gold or fiat). In fact, that banks have to set aside a specific amount of reserves at all is due to government regulation - regulation which these Rothbardian anarcho-capitalists should object to if they were in any way consistent.

Great point.

 

[Nimrod]

When the U.S. was under the gold standard in the 1800's, they used fractional reserve banking to make loans. In your world view that was counterfeiting, correct?

Fractional reserve banking is counterfeiting and a fraud. Whether the past, present or future.

 

[Mocking You]

Fractional reserve banking is counterfeiting and a fraud. Whether the past, present or future.

Why is it counterfeiting?

What's the alternative?

 

[Nimrod]

government regulation

There is your problem. Just because government approves a pyramid scheme for SS, or fractional reserves (fraud, counterfeiting). Doesn't make it right. Legalizing a sin doesn't make it right.

Most people on TOL defend FRB, so you fit right in.

 

[Nimrod]

Why is it counterfeiting?

What's the alternative?

Read what Murray Rothbard wrote. I quoted it twice.

 

[Mocking You]

Read what Murray Rothbard wrote. I quoted it twice.

Just because Murray Rothbard says it's counterfeiting does not clarify anything.

In your own words, why is it counterfeiting?

 

[Tinark]

There is your problem. Just because government approves a pyramid scheme for SS, or fractional reserves (fraud, counterfeiting). Doesn't make it right. Legalizing a sin doesn't make it right.

Most people on TOL defend FRB, so you fit right in.

Now you are trying to redefine yet another word in Orwellian fashion to suit your radical ideological agenda.

There is no fraud involved with fractional reserve banking - the two people who enter into the loan agreement or banking account agreement are not being lied to about anything in the terms. There is nothing hidden.

What you are saying is that government should step in to stop people from being able to enter into agreements with their own private property, neither of them being deceived about the terms of the agreement. How very statist of you.

 

[Nimrod]

your radical ideological agenda.

Ohhhhh, I am sooooo radical to think we should stop banks from committing fraud.

There is no fraud involved with fractional reserve banking

Banks lend out money that clients have deposited.
FRB thus leads to a situation in which two individuals are made owners.
person A deposit money, person B gets a loan using person A deposit.
Person A and Person B are owners of the same money.
Legally this is impossible.
Person A wants to withdrawal but the money is no longer there.
Fractional-reserve banking leads to contractual obligations that cannot be fulfilled.

"Fractional-reserve banking thus creates a legal impossibility: through bank lending, the borrower and the depositor become owners of the same money."
Arguing in favor of fractional-reserve banking would in fact be tantamount to saying that it is legal (or rightful or even lawful) that Person. B does whatever he wishes with Person A's property — without requiring Person . A's consent.

As Hoppe, Block, and Hülsmann note, "any contractual agreement that involves presenting two different individuals as simultaneous owners of the same thing (or alternatively, the same thing as simultaneously owned by more than one person) is objectively false and thus fraudulent."

http://mises.org/library/faults-fractional-reserve-banking

What you are saying is that government should step in to stop people from being able to enter into agreements with their own private property, neither of them being deceived about the terms of the agreement. How very statist of you.

In a free-market system, the practice of fractional-reserve banking would be illegal by its very nature. And so fractional-reserve banking would be ended (sooner rather than later) under the auspices of a functioning law of private-property rights.

I have no problem with Person A lending his money to person B. It is FRB that counterfeits money / commits fraud.

 

[Tinark]

Ohhhhh, I am sooooo radical to think we should stop banks from committing fraud.




Banks lend out money that clients have deposited.
FRB thus leads to a situation in which two individuals are made owners.
person A deposit money, person B gets a loan using person A deposit.
Person A and Person B are owners of the same money.
Legally this is impossible.
Person A wants to withdrawal but the money is no longer there.
Fractional-reserve banking leads to contractual obligations that cannot be fulfilled.

"Fractional-reserve banking thus creates a legal impossibility: through bank lending, the borrower and the depositor become owners of the same money."
Arguing in favor of fractional-reserve banking would in fact be tantamount to saying that it is legal (or rightful or even lawful) that Person. B does whatever he wishes with Person A's property — without requiring Person . A's consent.



http://mises.org/library/faults-fractional-reserve-banking

In a free-market system, the practice of fractional-reserve banking would be illegal by its very nature. And so fractional-reserve banking would be ended (sooner rather than later) under the auspices of a functioning law of private-property rights.

I have no problem with Person A lending his money to person B. It is FRB that counterfeits money / commits fraud.

Wow, as Mocking You has already pointed out, which you have refused to address, you are mixing up fractional reserve banking for fiat money and the federal reserve. Until you go back and re-read what he wrote until you understand the difference and respond to my post without bringing up fiat money or the federal reserve, talking to you is pointless.

I'll only respond to your final point: that fractional-reserve banking with a free-market system would be illegal by its very nature.

That is completely false.

Just as an easy example, let's say we have a system with private money, and the convention is to use gold as one of the primary forms of money.

I deposit $100 worth of gold coins at a bank and sets up an account for me. For this service, I agree to allow the bank to loan out this gold, and I also may withdraw the gold at any time (demand deposits). The bank can now lend out these gold coins. Person B borrows $95 of gold and then spends it with person C. Person C then deposits the $95 with my bank under the same terms, that the bank may lend out the money. I now have $100 on account with this bank, and person C now has $95 on account with the bank, for a total of $195, all created from my original deposit of $100 gold.

No federal reserve, no government involvement whatsoever. This is what fractional reserve banking is. Do you understand and, if so, do you have any objections?