nimble
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Posts posted by nimble
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Same people who deposit money in banks today. No one is forcing them to do so, and yet they do it nonetheless. That would seem to indicate to me that they think it is in their interest.
The only reason it is in their interest is because the government decrees that those worthless CDs have value and backs it up with its power to tax, so they take a part in the cheat because they stand to benefit from it.
Second, I do know how banks work. Ever read Von Mises? He has the exact same stance I have, if you ever read Rand, you would know she agreed with him economically. I would say that Objectivism dictates my position, but that isn't the point.
Banks do not have assets to cover their debts, and most of the time the assets they do possess will not cover their debts. For instance, when I got my car loan, the car was collateral. I paid 10,000 for the car. If the bank confiscated the car, if I default on my loan, it will not even get them close to 10,000 dollars. Paper is worthless. Lets say they print and have given out $1000 in CDs, yet they only have $100 in real MONEY gold. The paper is only worth the gold it represents. Thus all 1000 CDs only have worth relative to their gold. Thus each CD is only worth 1/10 of a dollars worth of gold. Or stated simply, they are only worth 10 cents each even though they may have a face value stated at a dollar. The bank cannot create value out of nothing. I only possess 500 dollars right now (this is my reserves). If I loaned out $5000 to my friends with interest, what would I be giving them? It doesn't matter that I print out checking deposits slips that say I loaned them 5000 dollars, I still didn't have the money to loan. The paper I gave them is worth considerably less than I printed on it.
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I think a good example of how shady this practice is would be to pretend that I can do what a bank does. Lets say I take my printer and print off some cool looking checking deposit slips, and I give 1000 of them to you at a 5% interest rate in a loan. Right now, I only currently possess 500 dollars in money. So really I just pulled the other 500 dollars of my thousand dollar loan out of thin air, and loaned it to you with interest. If anyone figured out my scheme and that I just "made up" the other 500 dollars, the value of your CDs would drop by 50% making them worth the amount of money I have to back them up. Thus fractional reserve banking, if honest about its practices, would become 100% reserve banking through market forces.
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I really wish someone would address the points I made. Yes, it is possible for that type of banking to be non-fraudulent. But who would participate in that type of system. If I were a bank and I had 10 dollars in gold, and then printed 100 CDs to represent that gold, what would you say the price of my CDs would sell for if the bank was honest and open about the fact that they have 100 CDs and only 10 dollars (gold)? It wouldn't be 100 dollars, unless you had the government enforcing it like it does now.
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How is fractional reserve fraud if you agree to the exchange? Are IOU's fraud too?
If you are arguing what I think you are arguing, then you want a bank to be like a stock broker, not a banker. You want a bank to take your gold (REAL MONEY), loan it out with interest, while you cannot redeem your gold, because it is not there, the bank loaned it out, then when the bank collects the loan it gives you a cut. That is not banking at all. With real banks you can withdraw your money, with fractional reserve banking not backed by the government the bank would not have anything to give you when you came to claim your money, yet they loaned it out. With government, they just print the bills to shut you up, but without government what is the bank going to do, make some more gold, so you dont start a banking panic?
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The issue you bring up is not that fractional reserve banking is fraudulent, it's whether a lying bank would trade its currency with others under the guise that it is 100% backed with gold. Sure, that's fraudulent, but fractional reserve banking isn't.
Okay, so lets say all the parties consent. And anyone who holds the CDs is honest about the fact that they are not worth their face value, then why would anyone use fractional reserve banking if they stand to lose 90% of their gold's value simply by putting it in a fractional reserve bank? When no one commits fraud everyone but the bank loses.
I concede that it is possible for it to not be fraudulent, however, I cannot see any use for that type of system because the loanee has at least 1000% interest on his loan, and the depositor of gold loses 90% of his golds value, and the only one who wins is the banker. See my example above if you don't understand what I just said.
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How would that work? Wouldn't the lack of a national currency cause potential chaos? Even more so internationally?
Why would you want a national currency? Wouldn't the government have to dictate what the currency would be in order to make it a national currency? That seems like government control of the free market, which wouldn't make it a very free market.
I suggest everyone should read Murray Rothbard's "What has government done to our money?" or Ludwig Von Mises "Theory of Money and Credit." Both are available to read online at www.mises.org
Rothbard's book will only take about 20 minutes to read.
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One last thing I wanted to point out, look at the accounting sheet of the bank, and there you will see the fraud. The bank owes 100 dollars in CDs, and it only has 10 dollars in assets. If any business had a balance sheet that looked like this, they might be Enron.
And thus the man who holds 10CDs because he deposited his gold will lose 9 dollars in this transaction, and the man who took the loan will owe 90 dollars when all he really received is 9 and the bank makes out like a bandit.Notice how the man who deposits the money loses 9 and the bank loans out 9. Isn't that like robbing peter to pay paul? Then the bank has the nerve to ask for there 90 dollars back from the man they only really loaned 9 dollars to. If that was a 1 year loan that would be 1000% interest plus whatever nominal interest rate they attached to the 90. So lets say they asked 5% interest on that loan, that would make the interest rate 1050%. Who would take that loan if the bank was honest about its fractional reserve policies?
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How is this fraud if the two parties are consenting? What if the consumer believes the bank on its word and wants to do business with it?
Under freedom, the government will lock up banks doing business with consenting customers? Dosn't sound like freedom to me.
The two parties might be consenting, but when there money is traded with other banks or in the open market, there money is considerably less valuable. If 10 dollars is printed by the bank to cover 1 dollar worth of gold reserve, then there money is only actually worth 1/10 of what it has printed on it. Yet they will trade it for goods and services as if it is actually worth 10 dollars, when in actuality it is only worth 1 dollar. So it is fraudulent to anyone they trade with. And if they are open about the fact that there money isnt backed by gold, then who would trade with them? The effective value of there money would go down to its real value if they ever let anyone know that its not back by gold. And then it would be just the same as having 100% reserves. I don't understand why all you very intelligent people cannot see how it is fraud.
Lets say I put 10 dollars worth of gold into this bank, they give me 10 dollars worth of CDs. Then the banking system goes out and loans 90 dollars worth of CDs as loans to people. So now the bank has 100 "dollars" in CDs (debt) but only 10 dollars worth of gold. If gold is the only thing with objective value then the amount of paper money will only be a fraction of what the gold is worth. It will have a relative price. So there is 100 dollars/10 gold, which means that each dollar is only REALLY worth 10 cents. The only thing making it worth more is the fact that the bank says its worth more. When the bank doesn't have the government to force people into accepting the banks word on its dollars' value, then the market will make these CDs worth what they are really worth. And thus the man who holds 10CDs because he deposited his gold will lose 9 dollars in this transaction, and the man who took the loan will owe 90 dollars when all he really received is 9 and the bank makes out like a bandit. If these people are smart enough to realize this they will go back to the bank and ask for them to make this right, and the bank will nullify the loan, and the man with the deposit will now have 10 dollars worth of CDs, and through market processes it will magically become a 100% reserve firm again. Thus it is either reserve or fraud or stupid people who don't mind losing 90% on there transactions with the bank.
edit for content
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The reason everyone always argues in support of a hard backed gold standard is that it would be inflation resistant when compared to current fiat currency. Actually I was just reading Gold and Economic Freedom (p 89 1st Edition, 3rd paragraph) and Greenspan actually does take a very Austrian view of currency.
He states effectively that each bank would keep a reserve of physical gold based on their experience. They would then of course loan some out and issue notes based on the total of the gold that they have on their books. So ostensibly the banks would be able to issue more notes than they have physical gold to cover. So, in the marketplace, as Hayek suggested with the "competitive central bank" idea, the value of the currency would fluctuate by the value of what people actually put on it.
Interesting. Citibank could issue paper with less gold but I'd trust them more than paper issued by say some bank I've never heard of that promised it's backed fully by deliverable gold, so I'd demand 100% payment in Citibank dollars but 200% in Bank of Sharpstown. Again, this could go right back to the argument where the government gets back into regulating the ratio of gold to dollars and we are right back to square 1.
Austrians want 100% reserves, that would eliminate inflation. Greenspan is still a fractional reserve banker, which I think is fraudulent. There is a whole thread on this in the econ. section.
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Proper money should be an objective value, i.e. gold. For information on why the gold standard is important, please refer to Alan Greenspan's essay "Gold and Economic Freedom" in Capitalism: the Unknown Ideal.
Paper money is properly referred to as "bank notes"; it is a claim check on a specific quantity of actually existing gold. The government should not print bank notes any more than it should operate banks.
So, paper money and coinage should not be manufactured by the government.
I have read that essay, and Greenspan argues for a gold standard, not a complete separation of state and money. He says state dollars should be backed by gold, when really I think the state shouldnt print dollars, and should not even determine that gold will be the commodity to back up the currency. If the market decides that cattle will be the medium of exchange then so it should be.
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I am just curious. From an economic standpoint, money is a device engineered by the free market, only since then has government tried to get in on the action to truly regulate the economy by printing or coining its own medium of exchange and declaring that it must be used instead of whatever commodity the people choose, be it gold or cattle. I would think that Objectivism would want money to be a free market thing, but I have never witnessed any lecture or chapter of a book reference it.
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Also, there is no point of "time" in which the universe didn't exist. Time is a property of the universe, and without the universe time has no meaning. So the universe has always existed in relation to time.
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The killing of civilians is morally necessary in times of war. If we hadn't dropped the bomb on Hiroshima, countless American lives would have been lost in an invasion of Japan. The blood of the innocent was on the Emperor's hands, not America's.
What makes American innocents any better than Japanese innocents? Could it be the arbitrary borders that are drawn on maps?
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Okay that takes care of property rights as they exist in our legal structures now. But I want to know how it works theoretically, like how it "ought" to be. I want to know why the Lockean theory of property rights, that you gain property by expending effort on it, why you continue owning it even when you are not expending effort on it. If that makes any more sense to you.
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55 people have viewed this and no one knows how to answer it? Please help, I need an answer. All I've gotten elsewhere are a bunch of utilitarian answers that say it only makes sense to keep property rights because it would mean you would have to continually do menial labor to keep the rights, which would be economically inefficient. I want a moral argument to defend this.
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Why do you still own the property (land, not commodities) when you stop using it? I know that working the land gives you the initial right to it, but why do you continue to own it even when you no longer work on it?
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In fact you've once again missed the entire argument. There's no point in continuing a discussion with someone who willfully evades the argument presented. I can see why the other posters had the good sense to stop talking to you. Good day.
You did engage in several logical fallacies, such as ad hominem. I think you may be in the wrong in this one. One's credentials has nothing to do with the truth of his statements. I know several idiots with PhDs and many brilliant people with only their brains as credentials.
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The point is that people were intentionally killed who never themselves initiated force. Their right to life was violated, but not by the Americans; they were violated by their own government the day Japan attacked Pearl Harbor.
I'm going to use a technique Rand employed often, called reductio ad absurdum.
Let's suppose your line of thinking is correct, that you are punishable for the crimes of those who control you, regardless of whether you submit willingly or not to the controller.
This would mean that children are punishable for what their parents do, because their parents often act on their behalf. It would mean that hostages are responsible for what their captors do. This is obviously ludicrous.
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I don't want to drift into a discussion about this, but I do hope you realize that this completely contradicts the Objectivist position.
BTW, do you have any response to #1?
I realize it contradicts the current Objectivist position, but I do not think it contradicts the Objectivist doctrines.
As for number 1, I do not think keeping information from the police is morally wrong. But harboring a criminal is wrong, because it requires the actively helping the criminal. I don't think keeping information from the police is a nice thing to do, but it definitely should not be a crime.
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I have two points, both tying this discussion back to concretes:
1. I'm sure most of you are aware of the brutal murder of Jessica Lunsford. There are some reports that Couey's half-sister and two others failed to tell officers that Couey was staying at their mobile home. Assuming this is true, would it not fall under the category of "non-action"? Who in their right mind would suggest that it should be legal to not tell the government that a child is being raped?
2. There are many examples of the government initiating force, while the responsibility lay with someone else. Do those who disagree with this concept regard the bombings of Hiroshima and Nagasaki as immoral?
I disagree with the bombings of Hiroshima and Nagasaki. I think that nuclear weapons are nearly impossible to use morally.
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“A right cannot be violated except by physical force. One man cannot deprive another of his life nor enslave him, nor forbid him to pursue happiness, except by using force against him. Whenever a man is made to act without his own free, personal, individual, voluntary consent -- his right has been violated.” -- Ayn Rand, "Textbook of Americanism"
"Only individual men have the right to decide when or whether they wish to help others; society -- as an organized political system -- has no rights in the matter at all." -- Ayn Rand, "Collectivized Ethics"
“Is man a sovereign individual who owns his person, his mind, his life, his work and his products -- or is he the property of the tribe (the state, the society, the collective) . . . ?” -- Ayn Rand, "What Is Capitalism"
Yes, I agree. Not only are the ones advocating subpoenas just reaching for reason and proof, but they do not acknoledge that subpoenas violate Objectivist ethics.
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Um, so, you're saying that proof of any kind is impossible?! You prove it the same way you prove anything else. If you can't prove it (or at least demonstrate that there is enough reason to request a subpeona) you can't get one.
The subpeona system has been functioning perfectly well in the U.S. for years. They are not that easy to get. They are often used in civil cases to get all the parties to show up with their evidence so that the dispute can be presided over by a judge.
I am saying that I could be at the scene of a crime, and when forced to testify. I get on the stand and say very little that actually helps your case. I could say I saw a man on a bike shoot a guy and leave. And when the prosecutor asks what he looks like, I could reply, I don't remember. And I could give that reply to several different questions, and there is really no way to prove what I remember and what I don't remember. Except for looking inside my brain. So, what was the point of FORCING me to go to court? If court appearings are voluntary, then only people with something to contribute will go. So not only would it be moral in practice, because the government would not have to initiate the use of force, but it would be more practical. And as we all know, the moral is the practical.
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I am sorry, that debate left above was probably the most rediculous argument I've ever read. Robinson has not skirted any issues. Also, after what may have been an hour of chatting, both of you managed to resolve nothing.
I think it is fairly obvious that a witness to a crime has no obligation to testify. Even if we could prove that in the philosophy of law, forcing testimony was justified. It could not be integrated into practice. How would one go about proving that a person was witness to a crime? How would you be able to prove that what that person witnessed was important to the case? How would you be able to prove that the witness, even if at the scene of the crime, paid attention to the surroundings, or remembered what happened? I think we can all see the flaws in a subpoena system.
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That's fine, nimble, but what A. West has outlined is something other than what you describe. He wrote, "banks can't and don't need to pay off all deposits at once." This suggests that a depositor and a borrower can both be issued receipts for the same bar of gold, and that such double-issue is legitimate since the bank need not cover the claims of depositor and borrower at once. I say that any bank that issues separate certificates for the same quantity of gold (and this is what fractional reserve banking is generally taken to mean) is engaging in a fiction, a fraud if you will. For two independent legal claims to the same quantity of gold (or other precious commodity) cannot be reconciled except by awarding ownership to one or the other.
Oh well if that's what he is stating, then yes I am with you on this.
Money: Does Objectivism Hold That Govt
in Economics
Posted · Edited by nimble
I am saying that in a free market, having a bank not have as much assets as it has debts, would cause the market to value the money of a fractional reserve bank less, to the extent that the fraction of the reserve that is kept would cause the value of the CDs to equal the fraction of the total CDs divided by the amount of real money (gold) in the reserve. So if a bank had 2000 CDs out standing in loans and deposits, and only 200 in reserves, their CDs would be worth the fraction 2000/200 on a free market (only if no fraud is committed). Also if you read Von Mises "Theory of Money and Credit" you would know that fractional reserve banking is the cause of inflation and the business cycle, which are both bad things.
Also...
I have never confused deposits with loans in any one of my posts. So I do not see any truth in your condescending statement.