Ah, Bach!
Posted on 03/22/2009 9:06:38 AM PDT by Dick Bachert
Bump for a.m. read. /
Like I said before, it depends how you look at it. Under what I’ve learned as official definitions from economists a true gold standard, fractional reserve banking can’t exist.
In 100% reserve banking as I’ve seen defined If a depositor agrees to give up use of some of his money so the bank is able to make loans, he agrees by contracting with the bank to give up claim to his money until the loan made on that money is repaid. In this case, what he can legally demand from his deposit is 100% backed. However if the bank makes a loan without his approval, he still legally has claim to all his money. What he has claim to is not backed 100% however, thus fractional reserve banking.
What you’re saying if I understand is that any combination of deposit and loan banking must practice fractional reserve banking because regardless of whether the depositor knows or not, he can not access all of his funds (unless through monetary inflation) and therefore total deposits are only fractionally backed.
Personally I don’t care, but I’m going to go with the definitions I was taught because they’re the only ones I’ve seen used until today. I’m not sure what more there is to say on the subject.
:’) G’night.
I'd like to see where you got that "official definition".
In 100% reserve banking as I’ve seen defined
I've never seen a historical example of any country that used 100% reserve banking. Do you have a few examples?
What you’re saying if I understand is that any combination of deposit and loan banking must practice fractional reserve banking because regardless of whether the depositor knows or not, he can not access all of his funds
Banks are able to loan a large portion of deposits because they know, on average, how much depositor money will be withdrawn in any average week.
Unless there is a bank run, any individual depositor can access all his funds. And if a bank comes up a little short, they can borrow excess reserves from other banks at the Fed Funds rate.
therefore total deposits are only fractionally backed.
Any bank that loans out any portion of deposits leaves the deposits only fractionally backed.
but I’m going to go with the definitions I was taught
Well, we did have a gold standard with fractional reserve banking. If that means our gold standard didn't count, so be it.
***I’d like to see where you got that “official definition”.***
Econ. classes, daily conversation, various books that mention it. It never really occurred to me to cite them.
***I’ve never seen a historical example of any country that used 100% reserve banking. Do you have a few examples?***
I don’t, sorry. I’m not sure if there ever have been, so I can’t say either way. One of my goals is to go through all of banking history at some point and really do an in depth study, but for now, I don’t any examples.
***Banks are able to loan a large portion of deposits because they know, on average, how much depositor money will be withdrawn in any average week.
Unless there is a bank run, any individual depositor can access all his funds. And if a bank comes up a little short, they can borrow excess reserves from other banks at the Fed Funds rate.***
I know that. I believe the coincidence of deposit and loan banking occurred (in addition to convenience) because depositors of gold coins rarely came in to collect their coins, so the holder was able to loan them out. But that’s another issue.
***Well, we did have a gold standard with fractional reserve banking. If that means our gold standard didn’t count, so be it.***
That was my point. We may have had an official “gold standard”, but it wasn’t *really* a gold standard.
Bullsh*t. It STARTED under the gold standard.
None of the anti-Fractional Reserve Goldbugs have been able to actually articulate how a modern economy could survive in a world where loans are virtually unavailable except at very high rates, and where the average Joe has to PAY the bank to hold his money there instead of earning interest...
The advantages to their system would be no inflation, no Federal Reserve, no economic growth, no employment.....
Technically, that would be a zero reserve system.
Article 1, Section 8.
L
The advantages to their system would be no inflation, no Federal Reserve, no economic growth, no employment.....
The Goldbug Variations?
You...you SCOUNDREL!
...consider that pun *stolen*.
Cheers!
Look at my other posts on this thread. I’ve said pretty much everything I want to say on this subject.
Great post. Thanks. TOTUS could take the first step to reversing the monstrosity by signing an executive order having United States Treasury print the bills of credit. /deadly sarcasm Great post/thread. Thanks to all posters.
That’s right. At the time those words were written, the phrase “COIN money” meant specie — coin of precious metals — NOT the debased junk metal “coins” now in circulation.
And Art.1, Section 10 put the STATES (which, prehaps you’ll recall CREATED the central government) in the vital position of KEEPING THE CENTRAL GOVERNMENT WITHIN MR. JEFFERSON’S CHAINS OF THE CONSTITUTION with regard to the honesty of the money by prohibiting them from accepting or recognizing any THING else.
We’ve forgotten all of that and now find ourselves in the current liberty destroying mess.
But nice try anyway.
“In questions of power, let no more be heard of confidence in men but bind them down from mischief with the chains of the Constitution.” T. Jefferson
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