/liberty/ - Liberty

>implying it's profitable to hand out loans willy nilly without the safety net of government bailouts

>implying the few people who defaulted on their exorbitant loans wont get death squadded out of the gene pool while simultaneously making examples of themselves

>>76706

> how can that happen when buying on credit breaks supply and demand

It doesn't break anything as long as you are loaning out of your own pocket and not getting bailed out by the government.

>hen people can freely take out a loan at basically any time, they're basically just being enabled to buy things that they can't afford

No sane banker has the ability to hand out loans like that and not go broke. Probably because it doesn't happen.

> because people who can't afford basic necessities generally can't get approved for a credit card or loan

They can take out smaller loans until they've got a long enough history of returning loans on time. Then they get approved. It also generally depends on the state of the economy at the time.

>This causes the price of those necessities to increase, which means that everyone in all of society has to pay an increased amount to support themselves

The market for those is still nowhere near as big. There will never be as much money going towards luxury items as there is for sustenance, unless food becomes so overabundant and easy to produce that it's no longer worth investing anything into it. Prices don't move just down or up. That's not how a market works or ever has. Effort goes where the profit will be. When basic necessities become too expensive a gap for investment opens up. The trend is to move from lower to higher profit margins.

>but there is no mechanism by which it's possible to place limits on the ability of banks to fuck everything up without so much as a vestigial state

How are they going to force anyone to bail them out without a State and with a lot lower influence given the far more severe competition?

>What do you do when people would vote against prosperity and freedom, given the opportunity?

They suffer the consequences of their own choices. I'm not going to get angry over the poor decisions of free people who are not coercing me in any way. Whatever they do it can never be as bad as it is now.

>>76706

>When people can freely take out a loan at basically any time, they're basically just being enabled to buy things that they can't afford.

We rail on and on about how irresponsible bankers are nowadays, because the government gives them the right to be, but even then, they're not nearly this irresponsible. A banker will not give you a loan unless he has the expectation that you will pay it back with interest.

>Certainly, the lack of a central government to enforce property rights will help

And why is a central government required? As I explained time and time again, property rights are based on custom, not decree. People would still see them as a thing even if the entire government just vanished overnight, and that's all that is required for new (or rather, old) means to protect property to spring up again. Armed citizenry, voluntary conflict arbitration… these existed before any central government did. The reason why we love the Icelandic Commonwealth so much is because it was a society strongly based on property rights but with almost no central government save for a general assembly they held every two years.

>>76709

>implying it's profitable to hand out loans willy nilly without the safety net of government bailouts

>>76718

>It doesn't break anything as long as you are loaning out of your own pocket and not getting bailed out by the government.

Except the bailouts just saved the banks themselves. Their practices were never about the wellbeing of the company, they were about the executives extracting value from the economy. Even if those banks had gone under, the executives could have just started new ones with the immense amount of wealth they had amassed. And even if they were then replaced by more scrupulous bankers, it doesn't matter because the bigger problem isn't the possibility of predatory business practices, but the necessary effect of skewing the market and creating bubbles.

Let's take the example of land: loans increase the number of people who can afford land, which then increases the price of land, because there's a more or less fixed supply with practically none being created. When the price increases, the number of people who can afford land is then reduced to exactly what it was before, but now with the added effect of pumping large amounts of money into the real estate industry. This creates inflation focused on the real estate industry. If that inflation increases faster than it can bleed off into other areas of the market, you get a bubble. If that bubble gets big enough, it pops. If the bubble pops, it takes everything with it.

Now, let's take the example of cars: without lending, fewer people can afford bigger, newer, nicer cars. The price of used cars increases as more people buy them or hold on to their older cars, and the price of new cars is reduced as people tend to buy smaller and cheaper cars with less bullshit since that's what they can afford. This is the natural state of the market; the state where supply and demand creates an equilibrium resulting in an efficient market with a minimum of overproduction. Meanwhile, if we reintroduce lending to this market, more people buy new cars that they can afford because they're stupid, and those cars get bigger and fatter and get more useless shit that no one actually cares about tacked on to inflate the price, because car manufacturers know that people will buy it if they can get a loan for it, and that people will be comparing those cars to their direct competitors (who will be using similar strategies to maximize profits) rather than to other modes of transportation, like buying used cars or just taking the bus. This results in the production of millions of new cars and the scrapping of millions of old cars, and increases the size of automotive industry by orders of magnitude. Instead of diverting all of that labor towards the artificially ballooned auto industry, the free market should have been directing it elsewhere.

>They suffer the consequences of their own choices. I'm not going to get angry over the poor decisions of free people who are not coercing me in any way. Whatever they do it can never be as bad as it is now.

These people are, in a very real way, voting against the existence of the free market. That's something that very much affects you. What if the ultimate goal that they're blindly aiming toward is exactly where we're at today? Would it make you feel any better to know that our dysfunctional world is the result of market forces driving the production of crpnyist governments?

>>76730

>even then, they're not nearly this irresponsible. A banker will not give you a loan unless he has the expectation that you will pay it back with interest.

It doesn't matter. The only time lending doesn't skew the market is when you could just buy that item anyway, but instead you invest your money (or keep it invested) and take out a loan at a lower rate. If everyone did this, the rates of loans would increase and it wouldn't work anymore. The whole point of lending is to allow people to buy things they can't afford. If lending disappeared, there would be less demand for the things people use lending to buy, which means a reduction in supply for those things, which means a reallocation of labor towards things that people buy without credit.

>As I explained time and time again, property rights are based on custom, not decree. People would still see them as a thing even if the entire government just vanished overnight

I agree; people's cars and houses would still be safe. However, it becomes infeasible for people to enforce their property rights over millions of acres of land without using publicly funded police to subsidize the cost of that enforcement over the entire population. Businesses will tend toward a franchise model rather than a straight corporate model since people are less likely to support the right of someone to own a building that he's never been to or had any input in but he just takes money from, than to own a house where he lives with his family. Property rights will still exist, but different pressures will cause the reality of ownership to crystallize in different ways.

>>76740

>The whole point of lending is to allow people to buy things they can't afford.

Yes, and how is that a problem? You allow people to buy things that they cannot buy right now. Either it's a consumer loan, in which case they just cannot afford yet what they're buying, or it's a capital loan, in which case they usually cannot afford the capital they buy at all, but would be able to afford it if they owned the capital in the first place. Again, how is that bad?

>However, it becomes infeasible for people to enforce their property rights over millions of acres of land without using publicly funded police to subsidize the cost of that enforcement over the entire population. Businesses will tend toward a franchise model rather than a straight corporate model since people are less likely to support the right of someone to own a building that he's never been to or had any input in but he just takes money from, than to own a house where he lives with his family. Property rights will still exist, but different pressures will cause the reality of ownership to crystallize in different ways.

And I would have no problem with that, if it were true. Although I don't see that much vacant property to begin with.

>>76706

>Ancaps and Libertarians believe in the supreme power of the free market to make everything work out, but how can that happen when buying on credit breaks supply and demand?

Protip: free will is real and the free market isn't a "system", a succesful free market is made possible by a small group of extremely good high-influence decision makers.

>When people can freely take out a loan at basically any time,

stop right there. They can't.

>bla bla bla rest of the paragraph

nope

>second paragraph

First off, these loans don't exist. If someone does give one, he's an idiot and he'll lose money. Banks don't do this because they want to be in business and not in debt.

The market works on optimism. If you loan $x and expect $2x in one year, you expect the market to deflate by more than x to actually make it feasible for the borrower to pay it back without difficulty and for the bank to make some profit. You can't just use money to buy money, this isn't one of your crypto scams. You actually have to increase production by that amount to have a real deflation by that amount. In lasseiz-faire capitalism, these scams are largely self-contained and there's no bailing anyone out from these because no one's monitoriing them. You lose money, your bad but the mere existence of a free market presupposes the existence of a much larger number of good decision-makers than bad decision-makers. If that ever tips on the other side, you'd have a bad economy, but things take time to go that bad, and most people would catch on pretty quick.

>lack of state

Well, I advocate a minarchist state (courts, military and police only) and voluntary taxation with lasseiz-faire capitalism.

>What do you do when people would vote against prosperity and freedom, given the opportunity?

Move somewhere else if I can't change it.

>>76749

>Yes, and how is that a problem?

In aggregate, it results in the production of large amounts of goods that consumers could presumably afford in the future, but factually cannot right now. Instead of increasing demand and therefore jacking up the price of those goods, the market would be better served by waiting until those consumers can afford to buy those goods. This results in increased market efficiency as production is based on what consumers want right now rather than what they would presumably want at some point in the future when they can afford it, it allows people to afford those goods sooner since it reduces the cost as demand decreases, and it plugs the hole of consumers buying things that they cannot and will not be able to afford. It's still possible for a credit card company to turn a profit off of someone who will never pay off his debts, but it's impossible to remove the market inefficiency caused by those debts.

>Although I don't see that much vacant property to begin with.

You must live on the east coast, then.

>>76740

>The only time lending doesn't skew the market is when you could just buy that item anyway, but instead you invest your money (or keep it invested) and take out a loan at a lower rate.

You can't "skew" the market via lending. There is no fixed State the market has to adhere to. Speculation and risk will always be a part of any non-primitive market.

>The whole point of lending is to allow people to buy things they can't afford.

Things they can't afford YET. That is the most important thing to note. It's an investment in the future. Almost nobody will lend you money for something you can't afford at all. There would be nothing in it for them besides losses. By your skewed reasoning any abstain from immediate consumption will offset the economy. There can be absolutely no economic development in such conditions. It's absolute and sure way to poverty with no way out. The opposite is preferable in every way. Markets can never develop even close to today's reality without speculation and specialists in capital investment.

>>76751

>stop right there. They can't.

That's exactly what a credit card is. It's approval for a series of small loans that can be taken out at will up to a specified amount.

>nope

Not an argument.

> Banks don't do this because they want to be in business and not in debt.

You're forgetting that businesses are owned by people, and those people are making choices that cause their own wealth to increase. Generally this is the same thing as increasing the wealth of the company, but not always.

>Well, I advocate a state that continues to extort taxes and only exists to enforce spurious property claims on abandoned land, intellectual """"property"""", and other ridiculous things that would be indefensible were it not for the existence of a government with a monopoly on violence

Wew lad, maybe this isn't the board for you.

>>76752

> the market would be better served by waiting until those consumers can afford to buy those goods

You can't know who can or can not be better off. Nobody has that kind of perfect information.

>This results in increased market efficiency as production is based on what consumers want right now rather than what they would presumably want at some point in the future when they can afford it

So it's a entirely low level, high time preference market of immediate wants only and the absolute lowest risk ventures possible.

> but it's impossible to remove the market inefficiency caused by those debts.

It's impossible to remove inefficiency alltogether in general. Crippling investment doesn't make capital allocate any better in of itself.

>>76755

He's right. You made assertions and he gave you nothing for them.

>>76753

>You can't "skew" the market via lending. There is no fixed State the market has to adhere to.

There is the state that it would be in if it weren't for lending, which represents current supply and current demand. Then there's the state of the market with lending, which represents current supply and future demand. The difference between state 2 and state 1 when offset to some point in the future creates inefficiency.

>Speculation and risk will always be a part of any non-primitive market.

[Citation needed]

> Things they can't afford YET. That is the most important thing to note.

>There can be absolutely no economic development in such conditions. If someone can't afford a microwave right now, it doesn't mean that no microwaves are being sold. The market isn't harmed by someone saving their money and buying a microwave when they can afford it. The market is, however, harmed by people buying things when they can't afford it because it causes more labor to be allocated towards things that consumers are not yet prepared to buy, and away from things that they need right now.

>>76756

>You can't know who can or can not be better off. Nobody has that kind of perfect information.

That's my point. No one has knowledge of the future, so I'm advocating that the market stop speculating on flawed data and instead work with what they have today.

>>76755

>That's exactly what a credit card is. It's approval for a series of small loans that can be taken out at will up to a specified amount.

Not everyone gets a credit card and credit cards get cancelled and/or blocked if you don't use them properly. Your assumption of banks handing out trust willy-nilly is woefully unfounded.

>not an argument

you didn't have one

>You're forgetting that businesses are owned by people, and those people are making choices that cause their own wealth to increase. Generally this is the same thing as increasing the wealth of the company, but not always.

There are no conflicts of interest between rational men.

>Wew lad, maybe this isn't the board for you.

been here longer than you, son.

>>76761

>Not everyone gets a credit card and credit cards get cancelled and/or blocked if you don't use them properly

First, I never said that anyone can get a credit card. I said that there is a population of people (credit card holders) who can take out a loan at any time, for (practically) any reason. Second, once again, there are ways that credit card companies can profit from people who don't pay off their debts even without state subsidies.

>you didn't have one

Okay, let's try this: I'll walk you through it, and you can tell me at which point you disagree.

<The free market assigns labor based on profit, and therefore based on demand

<Credit cards allow people to buy things they couldn't otherwise afford

<This results in an increased demand for luxury items like fancy cars and microwaves

<This results in labor being allocated in such a way as to increase the supply of fancy cars and microwaves

<Because lending doesn't create labor out of thin air, it results in labor being diverted from other industries

<This means that the supply of things that people can afford is reduced, while the supply of things that people can't afford is inrceased

<This means that the price of basic necessities, among other things, is increased, as supply is reduced but not demand

<This means that everyone's cost of subsistence is increased

<This contributes to the conditions that make people unable to afford those luxuries in the first place

>There are no conflicts of interest between rational men.

Yes, so everyone always cooperates in the prisoner's dilemma because it's ultimately in everyone's best interests, and no one would ever defect in any prisoner's dilemma scenario. I'm glad we could clear that up.

>been here longer than you, son.

And yet it's still /liberty/ and not /statist oppression/. Fancy that.

>Credit allow people to buy things they couldn't otherwise afford

Allows them to purchase things they cannot pay for at this instant. They can afford them. They have judged the utility of having the house for 30 years before they pay it off as higher than the minuscule amount of interest, and the much greater cost of renting. Amortized utility wise they cant afford NOT to take the loan.

>This results in labor being allocated in such a way as to increase the supply of …

Making a purchase for anything in any industry is a signal for this. It is not particular to credit.

>>76769

If it was impossible to buy a home on credit, very few people could afford to buy homes at current prices. This would reduce demand, which would bring the prices of homes down to what people could afford by tanking the badly inflated price of land and incentivizing more modest homes to be built on smaller plots instead of pumping out mcmansions. When all is said and done, lending doesn't actually enable more people to own houses, it just causes those houses to be needlessly large and pumps money into the economy without increasing real wealth.

>Making a purchase for anything in any industry is a signal for this. It is not particular to credit.

I never implied otherwise. What I said is that the purchases made on credit are different from those that would be made in the future with saved money were it not for lending. It's the latter set of purchases for which the laws of supply and demand result in an optimal equilibrium. The former adds layers of abstraction and a convient point for the anticapitalist elite to siphon wealth from the system without adding value.

>>76737

> the executives could have just started new ones with the immense amount of wealth they had amassed

what the bitch? are you dense? do you know what happens when a bank fails? what happens is they dont have any money and cant pay people trying to withdraw, he cant go on to something else because he would be stupidly far in debt without a bailout

>>76773

>He doesn't know about limited liability

Just because a corporation runs out of money doesn't mean its investors have to pay its debts out of pocket.

Your concerns are unfounded and ridiculous. Just like read Human Action or Man, Economy, and State. You don't need to even read the whole thing just flip to the relevant chapters.

>>76778

Independent businesses would specialize in issuing credit scores. Basically they would contact banks and lenders and ask for info on their customers like how reliable they are and things like that, then use that to compile a score, and then sell that score to anyone who wanted to know if it was safe to loan to that person. Of course you might ask how to tell the credibility of such a company, and the answer is you would have to learn from word of mouth, or by actually doing business with that company to see how reliable they are. It's in their best interest to give true information and not accept bribes because their whole business model is honesty. If it ever came out that they faked credit scores they would lose all of their money. on a similar note, this is also how things like drivers and pilots licenses would by issued; via trustworthy companies who specialize in handing out such things

>>76775

If not them, then who? The government? Remember the government is abolished in this scenario.

>>76771

>needlessly large and pumps money into the economy without increasing real wealth.

If the judged value of the larger house was not worth the greater investment the buyer would simply buy the smaller house.

>without increasing real wealth.

The value of having a house now is much higher than having a house in 20 years. Having a big house higher than 25 years. (vs renting markups). Claiming no increase in wealth is retarded. If people saved up and purchased houses when they were old renting the rest of the time there would be a massive reduction in value for wasted time.

>>76751

Generally agree but

>crypto scams

Are you by any chance the anon that doesn't understand how crypto works?

>>76766

><Credit cards allow people to buy things they couldn't otherwise afford

Different poster but this is what I disagree with. I was unable to get a credit card (not even a store card) because I had no existing credit. I had to provide proof of monthly bill payments (an entire year's worth) to get accepted.

>>76794

>I was unable to get a credit card

they just send them to you in the mail without asking trying to get you to sign up is this the 3rd world

>>76766

>First, I never said that anyone can get a credit card.

Yes, you did. Just folow the posts.

>I said that there is a population of people (credit card holders) who can take out a loan at any time, for (practically) any reason.

And like I said, the bank does not give you 100% trust with a credit card. It can be blocked during exorbitant puchases, and most people aren't insane and generally good decision makers in a free market.

>Second, once again, there are ways that credit card companies can profit from people who don't pay off their debts even without state subsidies.

And again, this is always contained in a free market.

>>you didn't have one

I thought you were joking with that paragraph.

>Okay, let's try this: I'll walk you through it, and you can tell me at which point you disagree.

okay

<The free market assigns labor based on profit, and therefore based on demand

Not completely true, the free market works on innovation, which is the first step. Everything comes after.

<Credit cards allow people to buy things they couldn't otherwise afford

Generally, yes.

<This results in an increased demand for luxury items like fancy cars and microwaves

This is where I disagree. You're not able to understand that the free market doesn't stand in every scenario. It isn't stable in every scenario. You need a substantial time period and a majority of honest, productive, good decision-makers to make it work. Your argument about shadow demands increasing the prices of things no one wants is just that, a scenario. This won't happen on a large scale in a real free market, because people are better than that. Also you haven't even thought about it properly, because there are way better examples than that would give better weight to the point you're trying to make. Too bad they're all invalid, but still.

>all that muh labor diversion

you can't assume that.

>muh prisoner's dilemma

It's a bullshit scenario where gauging context as an individual is impossible and the losses and rewards are completely arbitrary. It proves nothing other than selfishness does not work in that scenario. IRL, people don't buy things without looking at the price, people don't trade stocks without looking at the price and the market. Risks and rewards are predictable to a very large extent of you're rational, if you accept reality.

>And yet it's still /liberty/ and not /statist oppression/. Fancy that.

I'm not a statist.

You should read a book on economics or something before you debate here. That's obviously assuming you're not a shitposter, which would be sadder.

>>76817

>the free market works on innovation

Not op but a free market is really not dependent on innovation. Innovation comes as a result.

>Generally, yes.

Only can't afford AT THAT INSTANT. They can afford it though. They have judged the value of having something now greater than the interest of the loan.

>you can't assume that.

Any purchase ceteris paribus is a market signal for reallocation of resources. You are basically saying "you cant assume the price will rise because of demand". No shit obviously but we talk about these things with C.P. at the abstract macro scale for causality tracing reasons.

>You should read a book on economics or something before you debate here.

i'm not the samefag but you should do some more reading yourself.

>>76787

Creditors take losses on their bad loans. The entity that they loaned money to no longer exists. I suppose that unlimited liability would be enough to fix the problem of rampant lending that I'm concerned with, but it would also have implications for business ownership that most ancaps would not at all be okay with. If a large company racks up debts that exceed the investments of its shareholders, and there's no limit on liability, then creditors could go to each shareholder and take every penny they possess.

Imagine owning 5 shares of Company A at $2 apiece. Company A has a debt of $20 million, cash reserves of $5 million, and a net yearly profit of $8 million. Seems pretty safe, right up until someone big and unexpected happens. Maybe there's a viral video of an employee calling a customer a dumb cunt that results in a boycott, and now it's not making any money. Maybe it keeps going for another year, but things never pick back up, and it's forced to shutter its doors. By this time, Company A has blown through its cash reserves, racked up another $5 million of debt, and it's now $25 million in the hole. Remember, you only bought in for $25.00, and now that money is all gone. Someone has to pay that $25 million bill, though, right? And it's not going to be the government. In this alternate reality with no limits on liability, you (and the rest of the shareholders) are on the line for every penny of that $25 million. So what looked like a small, safe investment to diversify your portfolio ended up getting your house, your boat, and your car repossessed, even though you had never taken out a loan yourself.

>>76791

>If the judged value of the larger house was not worth the greater investment the buyer would simply buy the smaller house.

Through the mechanism I presented, I showed that in the absence of lending, more, smaller houses would be built. The effect on net wealth in the economy as a whole is zero, but money is effectively "printed" in the process (creating inflation in the housing market, and therefore contributing to a bubble), and fewer people are able to buy houses.

>The value of having a house now is much higher than having a house in 20 years. Having a big house higher than 25 years.

The market doesn't wait on one person to buy. Someone is always buying right now, someone is always buying tomorrow, and someone is always buying next week. Shifting everything one way or the other equally doesn't change that. It's like turning a clock back 5 minutes and claiming you've added time to a day.

And remember, I'm not arguing that everyone should voluntarily choose to turn down loans when they're available. I'm claiming that the availability of loans is not a net advantage to the economy.

>>76794

You're missing the point. Once you have a credit card, you're able to buy things that you don't have money for. If you had the money for it, you could just buy that thing without using the card. Yes, it's possible to use your card for everything and then pay it off completely every month to get those loyalty points, but those points themselves are subsidized by other consumers making poor choices and paying substantial amounts of interest.

>>76817

>Yes, you did. Just folow the posts.

I didn't but I understand how you read it that way. What I said was "When people can freely take out a loan at basically any time…" The people I was referring to was not "everybody" or "all people," it was a specific demographic: "people with the ability to take out a loan at any time," i.e. credit card holders.

Instead of reading that sentence as "Because all people can take out a loan at any time with no oversight…" it should be read as "Because there exists a large number of people who hold credit cards and therefore are preapproved for loans to be taken out at will up to a certain limit…"

>Your argument about shadow demands increasing the prices of things no one wants is just that, a scenario.

I never said no one wants those things. Clearly they do. What I said is that the existence of lending is doing those people a disservice by increasing the cost of things that they need, and therefore contributing to the factors that prevent them from being able to afford those luxury items in the first place. Here, let me reiterate the key points:

<Credit cards allow people to buy things they couldn't afford without them (i.e. they don't have money to pay for)

<(Nearly) all people who are alive can afford basic necessities (or else they wouldn't be alive)

<If lending didn't exist, people wouldn't buy things they can't afford (luxuries), but would continue to buy things they can afford (basic necessities, among other things)

<The ability of people to buy things they can't afford signals the market to divert labor from the production of things people can afford

<This increases the price of the things people can afford (basic necessities) due to reduced supply

<This means that people are spending more on basic necessities and less able to afford luxuries

<This means that people rely on credit to buy things that they might still be able to afford with a little bit of saving were it not for the existence of lending, which reduces their disposable income and inflates the market for luxuries

>>76823

>The effect on net wealth in the economy as a whole is zero

>more, smaller houses would be built.

This is not a zero sum relationship. The gain from having the item purchased with debt outweighs the interest on the debt. Every transaction you complete is done because you value whatever you are getting more than whatever you are giving (otherwise you would not transact) resulting in a wealth increase.

>>76826

You're still thinking on the scale of the individual, while I'm talking about the scale of the economy. It makes individual sense to buy a $5 million house on credit and then profit as the value of the house increases over time. Meanwhile, on the scale of the economy, there's no difference between the creation of a single $5 million house and the creation of 100 $50,000 houses in terms of net wealth. When framed this way, lending adds nothing to the economy but results in 99 families paying rent instead of owning a home.

>>76828

> It makes individual sense to buy a $5 million house on credit and then profit as the value of the house increases over time.

Regardless of if the price increases the purchase on a loan is worth it.

>When framed this way, lending adds nothing to the economy

It does not add nothing. It allows individuals to exchange future earnings into present items. Having the items now is of greater value then having them in 20 years. Any house that is not a dirt shack is going to cost several years of income. Renting is almost always amortized as monthly expenditure more expensive then purchasing a house with a loan. By banning lending you are just forcing the poor to spend a greater fraction of their income on rent. Cheap houses and expensive houses can exist either way, the buyers simply decide how long they want to have to pay off their loan.

>>76829

You're still thinking on the level of "I am an individual with access to a line of credit. Should I take advantage of it or not?" The answer is, of course, yes. I'm not denying that.

What I'm saying is that the amount of wealth that is created is bounded by amount of skilled labor which is available to create it, not by the arbitrary number of dollars that is available to fund it. If there were only a tenth of the number of US dollars available (in any form, not just physical currency), nothing about the economy would change, just all of the prices would be ten times lower. The increase in money that results from fractional reserve banking does not represent an increase in real wealth. Lending is not a form of wealth creation, it's a form of wealth redistribution. Where 100 smaller homes would be built without the existence of lending, 1 enormous home of the same value is built with lending. This represents no value being added to the economy due to lending.

>>76832

>The increase in money that results from fractional reserve banking does not represent an increase in real wealth

Inflationary currencies are a form of savings taxation. Lending is independent a currency being inflationary.

>Lending is not a form of wealth creation, it's a form of wealth redistribution.

Lending increases wealth.

>Bounded by amount of skilled labor which is available to create it

Wealth is not limited to labor

>Where 100 smaller homes would be built without the existence of lending, 1 enormous home of the same value is built with lending.

This is a stupid claim. I don't want a enormous house I want a normal house. The fact that I can get a loan does not mean I will be one enormous house. I will buy whatever probably small house I want, and benefit by having it now instead of in 10 years.

>>76835

>Lending creates money. Here, have a graph.

You clearly don't know what that graph says or how fractional reserve banking works

>lending does not add labor or change its effectiveness

It is labor neutral, exchanging your future labor for others present labor.

>What is normal

Being able to buy a big house does not mean I will buy one. If I want a small house I will buy one.

>Lending allows a smaller number of people to buy larger houses,

A bigger house means a more expensive house. A more expensive house means you will be exchanging more years of your labor to have something now. Everyone does not up and decide to buy a house on the same year. The size of the loan production neutral. The time span of the labor you dedicate is what is variable.

>>76835

>lending creates money

Maybe in some statist dystopia wher you can print money to lend out. In ancap you lend someone money and then you dont have that money anymore.

>>76843

In ancap you can print as much money as you want.

>>76844

In ancap no one is forcing people to use bits of paper with no backing.

>>76846

Thats fine and all but the ford company store only accepts fordbucks

https://en.wikipedia.org/wiki/Fordism

>>76847

>here's a wikipedia article that doesn't have anything to do with my post

https://en.wikipedia.org/wiki/Abronia_ochoterenai

>>76848

>capitalist issuing his own fiat money to use at the company store

>unrelated

>>76849

There's nothing at all about company stores or fiat money on there.

>>76850

its a jumping off point

>>76837

>You clearly don't know what that graph says or how fractional reserve banking works

I think you're going to need to explain the interpretation that says that fractional reserve banking has no effect on the money supply. While you're at it, I'd appreciate it if you would explain to me what Murray Rothbard actually meant when he said "Commercial banks—that is, fractional reserve banks—create money out of thin air. Essentially they do it in the same way as

counterfeiters." I mean, it seems pretty straightforward to me, but I guess I must be missing something.

>Being able to buy a big house does not mean I will buy one. If I want a small house I will buy one.

Big and small are still relative descriptions, and the size of house that you want is still strongly influenced by the size of house that other people are buying.

>Everyone does not up and decide to buy a house on the same year. The size of the loan production neutral. The time span of the labor you dedicate is what is variable.

Yes, this is what I've been saying. And because most people won't choose to buy their houses when they're 50 and have all of the money saved up that they would have spent on the loan, that means that they'll be buying smaller houses earlier on rather than larger houses later on. It's these small houses that the market should properly be selecting for.

>>76856

>that they would have spent on the loan

…that they would have received from the loan*

>>76856

>Yes, this is what I've been saying

No what you have been saying is:

>The effect on net wealth in the economy as a whole is zero

>Big and small are still relative descriptions,

I think this is bike shedding and their of us actually care about it

Lets back this up a bit.

A person has finite number of work hours in there life which means they are going to have a finite amount of money. Lets say a person ends their life having earned a total million dollars total which they may have spent on living expenses, or taxes, or spent on tourism whatever.

This million dollar sum is just number that can be exchanged for goods, it is a means to goods. A person trades their money for goods they value more than their money. Having something over time is more valuable than having it having it for a short time closer to death. As such a person should spend this total million dollar sum at the youngest point in their life possible so they get the maximum value out of their goods. Enjoying the flatscreen TV, the big house, the nice car etc.

In the case of housing renting would be more expensive than a housing loan so not getting a loan would be a waste of money, And saving up for a nice thing would reduce the total value you get out of it because you have it for less time. As an individual you almost always want the loan for big purchases.

>It's these small houses that the market should properly be selecting for.

With lending house prices would likely go up but only in relationship to the bigger sizes of homes people are buying. Because people are not all buying houses at the same time and they are buying the same number of homes the price should be stable. Lending could of course allow people to bid each other up. However a bidding war is a market signal for more goods to be built, and as long as lending was not market shock turned on one day randomly, then it would balance quickly. Building houses does not take very long.

Lending has an inflationary effect in current economic systems however this is because lending is literally inflationary as a result of the reserve systems. With a capped monetary supply this dynamic is much different.

>>76860

>In the case of housing renting would be more expensive than a housing loan so not getting a loan would be a waste of money

Once again, you're thinking on an individual level, rather than a market level. If a loan is available to you at affordable rates it's advantageous to make use of it. I haven't said anything to deny that. What I have been saying, though, is that the existence of lending doesn't cause houses to be built that wouldn't have otherwise. Those houses would still be built, just built differently. So while an individual may benefit from taking out a loan, the economy as a whole does not.

>Because people are not all buying houses at the same time and they are buying the same number of homes the price should be stable

Except that people will still want to buy houses when they're young, because it's cheaper than renting. Because lending allows people to buy expensive, luxurious houses at a relatively young age, those young buyers are buying expensive luxurious houses instead of small, inexpensive homes they would have purchased if taking out a loan wasn't an option. Because the demand for large houses is increased by lending, more large houses are made. This means that fewer houses are built, because land is a zero-sum game. The net result is that lending causes more people, not less, to be forced to rent rather than buy homes.

>Lending has an inflationary effect in current economic systems however this is because lending is literally inflationary as a result of the reserve systems

I'm glad we've gotten past the "fractional reserve banking doesn't print money, everything is fine goyim" memery.

>>76863

>doesn't cause houses to be built that wouldn't have otherwise.

>Except that people will still want to buy houses when they're young, because it's cheaper than renting

The whole country is not young at the same fucking time. The fact that its young people buying and not old people does not increase the amount of people buying. If people rent young and purchase old, or purchase young, and do nothing old, its the same number of houses purchased per year.

>those young buyers are buying expensive luxurious houses instead of small, inexpensive homes they would have purchased if taking out a loan wasn't an option

agreed

>Because the demand for large houses is increased by lending, more large houses are made

agreed

>This means that fewer houses are built, because land is a zero-sum game

Disagree. Only in big cities is land expensive. Not everyone has to live in the same spot. Most of the world has so few people the population could increase 10x and still have plenty of land for farming and people. Even china and india have tons of land left with no one on it.

If you want to live in an expensive city it means you will be in a small house but a very luxurious house Vs the not luxurious and small house you would be getting without a loan.

>I'm glad we've gotten past the "fractional reserve banking doesn't print money, everything is fine goyim" memery.

is not the same thing is federal reserve backed fractional reserve banking

>>76864

>doesn't cause houses to be built that wouldn't have otherwise.

That does not follow

*is not the same thing as

>>76864

>The fact that its young people buying and not old people does not increase the amount of people buying.

Without lending, very few young people would have the money to buy the kinds of houses that are currently being built; they're just too expensive. That means demand is lower, and therefore the prices will fall in turn. However, you won't see McMansions going on sale for $20 because that won't cover the cost of building it. So what you'll see are smaller houses being built, because people can afford them, and more houses being built, because smaller houses provide an opportunity to split land into smaller parcels and make up the difference in volume.

So who's going to live in these extra houses that are being built? Easy. Fewer people will rent because the cost of owning a home is brought down within their grasp. There will be a reduction in apartments and projects, and fewer millennials will be living with their parents into their 30s.

>Only in big cities is land expensive. Not everyone has to live in the same spot.

I agree. I think part of the reduction in housing prices as a result of ending lending would be from deurbanization, which I see as a good thing. That still doesn't mean that it's feasible for your average 25 year old to go buy a plot of land in the middle of the desert and live on it. Land closer to civilization will still be more valuable, and there's still a limit on the amount of habitable land in the country that's probably not going to change much until the population is significantly larger than it is today, necessitating uninhabitable land to be reclaimed.

>is not the same thing is federal reserve backed fractional reserve banking

Irrelevant. Fractional reserve banking is inflationary by design. You could argue that those banks wouldn't last very long without a bailout, but I'll just point out that JPMorgan Chase has been around for well over a hundred years, and how well it weathered the recent recession, grabbing up Bear Stearns and WaMu at bargain bin prices in the process. There's no reason to think that it's impossible for a fractional reserve bank to flourish in ancapistan, especially if limited shareholder liability is maintained.

>>76866

>JPMorgan Chase has been around for well over a hundred years

We have had a reserve system for over 100 years

>there's no reason to think that it's impossible for a fractional reserve bank to flourish in ancapistan

Fractional reserve systems are incredibly vulnerable to bank runs if you cant print money.

>Fractional reserve banking is inflationary by design

Fractional reserve banking leads to no increase in monetary supply unless combined with an inflationary reserve / minting system.

>>76866

>Without lending, very few young people would have the money to buy the kinds of houses that are currently being built;

Yes

>That means demand is lower, and therefore the prices will fall in turn.

This does not follow. Demand for number of houses is the same. Demand for size of house is different. Price would fall only because in relation to the size of the house.

>smaller houses provide an opportunity to split land into smaller parcels

Houses can be luxuries and small inside cities. It is not like house size is the only metric that can increase cost.

>there's still a limit on the amount of habitable land in the country

Not really, plenty of land just need more cities.

> That still doesn't mean that it's feasible for your average 25 year old to go buy a plot of land in the middle of the desert and live on it

You can have expensive and in civilization or cheap and outside of it. Pick what you want.

>Fewer people will rent because the cost of owning a home is brought down within their grasp

they will be wasting money renting until then.

>cost of owning a home is brought down within their grasp

A loan does not mean the price of small houses goes up in a non inflationary currency

>>76867

>We have had a reserve system for over 100 years

We have, but it hasn't been constantly bailing out banks for that entire time.

>Fractional reserve systems are incredibly vulnerable to bank runs if you cant print money.

They rely on consumer trust to prevent that from happening. For the the most part, it works. Maybe everything fucks up every 60 or 80 years, but that's plenty of time for two entire generations of bankers to make their fortunes defrauding the public. Plus, so far, they've been pretty good at diverting attention from the actual cause of the problem and blaming literally everything else. Who says the Bank of Ancapistan can't just go belly up from time to time but promise that it was just a fluke and it'll really work, next time, I promise, just give me your shekels? People fucking lap that shit up, especially when they know that they'll be at the good end of the ponzi scheme this time.

>Fractional reserve banking leads to no increase in monetary supply unless combined with an inflationary reserve / minting system.

It pumps unbacked money into the economy. There's no way that can't result in inflation. The very fact that they're vulnerable to runs shows that they're lending out money that they don't actually possess.

>>76868

> Demand for number of houses is the same.

That's demand for those specific houses, ie houses built to the current standard.

<People can no longer get loans

<People can't afford houses as currently being built

<Demand for current house designs drops to near zero

<Houses are redesigned to account for the change in the market

<Demand begins to rise

<Market reaches an equilibrium based on the affordability of houses to people in their late 20s/early 30s without loans

<This necessitates smaller houses, since the new price is much lower than the cost of producing the kinds of houses that are being built in the real world today

<It also necessitates smaller plots since people still want to live near other people

<But it also necessitates deurbanization since people don't want to live on a 1000 sq ft plot

What we end up with is smaller houses on smaller plots, but more plots and more total land area dedicated to housing.

>Houses can be luxuries and small inside cities.

Demand for homes in SF and NYC will go down, as well. There's a practical lower bound for plot size, and once you go below that no one will want to live there. So yeah, plots that are already at or near that lower bound won't be parcelled out, they'll just look unattractive next to much cheaper homes in less crowded areas.

>they will be wasting money renting until then.

Yes, but because the prevalence of lifetime renters is reduced, the actual total number of months the average person rents a house is reduced. Put another way, the many benefit at the expense of the few. And put another way, the existence of lending benefits the few at the expense of the money. And put yet another way, lending is wealth redistribution, from the poor to the wealthy.

>A loan does not mean the price of small houses goes up in a non inflationary currency

Even without inflation, lending affects the price of homes due to the market skewing effect I outlined earlier. It diverts labor toward large homes, and away from small homes (and food, and clothing, and bicycles, and whatever). This causes large homes to be built often, while small homes can't be built on credit since there's less profit in it for the bank as well as more risk (they'll have a harder time selling the property in the case of a default). This means that fewer houses are built (since they're being built according to the demand of a smaller number of people: those who have the ability and desire to take out a multi-decade loan), which means fewer people own homes, which means that demand for rental homes increases, which raises the price of renting, which further decreases the ability of people to buy a first house of any size without a loan.

>>76873

Fuck off.

>>76800

I never had this and live in the US. Also, I had to seed in money to set up a credit limit. If I took out a student loan in college, maybe I would have gotten these offers.

>>76893

>Maybe everything fucks up every 60 or 80 years, but that's plenty of time for two entire generations of bankers to make their fortunes defrauding the public.

That is why it is important to have multiple deposits and depositors insurance to spread one's risk. Also, consumer reports to select the banks that possess your preferred level of stability and interest rate accrued from deposits.

That is pretty much the scenario pre-FDIC.

>>76948

>That is pretty much the scenario pre-FDIC.

Fractional reserve banking existed for hundreds of years before the FDIC, and it was theft and fraud for that entire time, just as it continues to be today. The question (in part) is how it can be prevented in a free society since it's effectively defrauding future generations that don't yet exist to defend themselves from it. The other half of the question is how we can counteract the poor-to-rich wealth redistributing effect of lending without resorting to taxes.

>>76972

It was not always fraud and theft, otherwise there would be no future depositors. Even in free societies, fraud can be deterred (i.e. DRAs, private courts).

>poor-to-rich wealth redistributing effect of lending

Can you clarify this?

>>76873

>calls people idiots but is a disgusting degenerate that posts nigger porn, is a literal soy boy, and doesnt understand how money works.

consider suicide

>>76975

>It was not always fraud and theft, otherwise there would be no future depositors.

There will still be future depositors, because those who don't understand how banks work will continue to throw their money at them without a second thought, and those who do will be convinced that they can keep the jig up for just a little while longer.

>Even in free societies, fraud can be deterred (i.e. DRAs, private courts).

And yet fractional reserve banking has continued to exist for hundreds of years. What is the magical component of a stateless society that prevents fractional reserve banks from existing?

>Can you clarify this?

See: >>76766.

>>76893

>We have, but it hasn't been constantly bailing out banks for that entire time.

With infinite federal reserve money

>but that's plenty of time for two entire generations of bankers to make their fortunes defrauding the public

You ever met old people that keep all their money hidden somewhere? People used to have very shitty trust in banks. Its only now that they will be paid back in printed money that they trust the system.

>It pumps unbacked money into the economy

It does not pump unbacked money into the economy. It allocates future money and labor into the present economy.

>What we end up with is smaller houses on smaller plots, but more plots and more total land area dedicated to housing.

Shitty small houses where you have to rent for years instead of getting a loan and buying a luxurious small house.

> There's a practical lower bound for plot size, and once you go below that no one will want to live there.

Unless they are paid well, see SF.

> Put another way, the many benefit at the expense of the few

No everyone is fucked by living in a shittier house, and having to rent before they can buy that shitty house.

> lending is wealth redistribution, from the poor to the wealthy.

Not its wealth redistribution from the future to the present. A trade of labor now for labor then.

>Fractional reserve banking existed for hundreds of years before the FDIC

A a much smaller scale, with much higher interest rates, with many people not trusting banks.

>What is the magical component of a stateless society that prevents fractional reserve banks from existing?

It will. As long as it does not have its own currency it will operate much differently.

>>77004

>With infinite federal reserve money

The fed has infinite money by the same mechanism that the banks do: lending out money that they don't actually possess, ie printing money. Besides, once again, fractional reserve banking predates central banks.

>You ever met old people that keep all their money hidden somewhere? People used to have very shitty trust in banks.

That's just a Great Depression meme. Note that a shitload of people had to have their money in banks before the Great Depression in order to get fucked by it and learn their lesson. Note as well that bank runs, credit crunches, and economic depressions had all happened before that.

>It does not pump unbacked money into the economy

You really need to read Rothbard's Mystery of Banking before we can continue this discussion. You can skip to the section on Deposit Banking if you want, although the whole book is worth a read.

https://mises.org/library/mystery-banking/html

>Shitty small houses where you have to rent for years instead of getting a loan and buying a luxurious small house.

That you actually own once you buy it instead of effectively leasing it from the bank for 30 years, so you can't lose it if you get laid off or your insurance won't pay for your daughter's leukemia treatment. Plus, the actual incidence of renting will be reduced as more people are able to eventually own homes.

>Unless they are paid well, see SF.

What I'm saying is that plot sizes in SF can't really be made any smaller. You can split a plot 6 ways in the suburbs to make each resulting plot cheaper, but if you try the same thing in SF you may not have enough room to fit a cardboard box on the property. Housing prices in the city probably wouldn't drop by a whole lot if lending wasn't an option, so people would end up moving out of the city.

>No everyone is fucked by living in a shittier house, and having to rent before they can buy that shitty house.

"Everyone" doesn't own houses. The number of lifetime renters is much greater than you think, and the number of people who own their houses outright is miniscule.

>Not its wealth redistribution from the future to the present.

I'm still waiting for a refutation of the market skewing effect of lending that I laid out here: >>76766.

>A a much smaller scale, with much higher interest rates, with many people not trusting banks.

And despite all of those things, it still existed, defrauding not just their own customers but the entire economy.

>As long as it does not have its own currency it will operate much differently.

I don't catch your drift, please clarify this.

>>77243

>The fed has infinite money by the same mechanism that the banks do

No the fed buys assets from banks as quantitative easing not as a loan among other things.

>once again, fractional reserve banking predates central banks.

Yep and it operated differently.

>You really need to read Rothbard's Mystery of Banking before we can continue this discussion.

You know to understand the subtleties of the conversation

>That you actually own once you buy it instead of effectively leasing it from the bank for 30 years

Yes a shitty home than if you bought a nice one on a loan, while in the meantime wasting extra money on lending.

>What I'm saying is that plot sizes in SF can't really be made any smaller.

SF has idiotic height limits. They could allow more stories to be added to houses.

>Housing prices in the city probably wouldn't drop by a whole lot if lending wasn't an option,

Housing prices would go up as the houses would be nicer.

>The number of lifetime renters is much greater than you think,

The welfare whores that get all their money from the government and cant get a loan from the bank. Productive individuals can get loans. Wikipedia says 67% of white americans own a home, Its probably safe to assume that the rest are a combination of the young and other small groups. If they have to rent then lending won't increase the cost of renting. It will make it easier for landlord to have more houses built via loans.

>And despite all of those things, it still existed

The consumers judged the value of having their money in the bank was higher than the risk of losing it all.

>I'm still waiting for a refutation of the market skewing effect of lending that I laid out here:

I did several times above

>>77251

*Housing prices may go up as the houses could be nicer.

>>77251

>No the fed buys assets from banks as quantitative easing not as a loan among other things.

The fed buys assets from banks with money they don't have, increasing the money supply. That's why quantitative easing is colloquially known as "printing money." It's the method by which fiat currency is debased.

>Yep and it operated differently.

It didn't. They couldn't afford to take as much risk, but the underlying principles haven't changed.

>You know to understand the subtleties of the conversation

You're making provably false claims. That's not particularly subtle.

>Yes a shitty home than if you bought a nice one on a loan, while in the meantime wasting extra money on lending.

You realize that it's possible to buy an inexpensive home, then save up for many years and sell your house to buy a much nicer home, right? And in the meantime you would save all sorts of money on interest. The only reason that's not the most cost effective option is because cheap homes don't exist today (thanks to lending).

>SF has idiotic height limits. They could allow more stories to be added to houses.

It's difficult to build skyscrapers without lending.

>Housing prices would go up as the houses would be nicer.

So because people can no longer afford a thing, reducing demand, the price will increase despite supply remaining constant?

>The welfare whores that get all their money from the government and cant get a loan from the bank.

These are people who are artificially kept unproductive through governmental disincentives to work. They won't exist in ancapistan, although there will always be people who are less well-off than others. Why shouldn't day laborers own houses, though? Stop making value judgements and the economic benefits of increasing the pool of potential home buyers.

>Productive individuals can get loans. Wikipedia says 67% of white americans own a home

"Own" meaning that you're still paying paying someone else in order to live on your property. Even then, that's over 80 million people who don't own homes, even with your arbitrary race restriction.

>Its probably safe to assume that the rest are a combination of the young and other small groups.

Oh, well if the hundreds of millions of people who don't own houses belong to "small groups,' then I guess we can safely ignore them.

> If they have to rent then lending won't increase the cost of renting. It will make it easier for landlord to have more houses built via loans.

If more people own homes, the number of renters will be reduced, not increased. Also, there is no mechanism by which a large number of people will be priced out of renting. If they are, then the price of renting. Availability of housing has never in history been a limit of population size; people will just build more houses.

>The consumers judged the value of having their money in the bank was higher than the risk of losing it all.

So you're saying "fraud should be allowed because what if some people might want to have their money stolen"? Keep in mind that we're specifically talking about fractional reserve banking here, not full reserve banking or money warehousing.

>I did several times above

You're going to have to point out where you posted anything approaching a valid refutation; I must have missed it.

>>77267

>The fed buys assets from banks with money they don't have, increasing the money supply.

Not on a loan. Lending is not the same. Lending is a labor maturity transformation.

>but the underlying principles haven't changed.

of course

>You're making provably false claims

>provably false

okay bud

>then save up for many years and sell your house to buy a much nicer home, right?

And you will have not had it for 50 years vs getting it when you are 20. absolute waste

>It's difficult to build skyscrapers without lending.

Not for the rich people that own the buildings in the city

>So because people can no longer afford a thing, reducing demand,

Quality and quantity are not the same thing. They are both houses.

> They won't exist in ancapistan

then the rental numbers will be different

>Why shouldn't day laborers own houses, though?

they should. and they will be able to get a loan like everyone else. If they cant get a loan they can rent which wont be more expensive with loans existing.

>meaning that you're still paying paying someone else in order to live on your property.

Even if you consider loans rent, its a much cheaper rent.

>if the hundreds of millions

Except its not hundreds of millions

>If more people own homes, the number of renters will be reduced, not increased

yep and landlords could get loans to fund the housing for the renters, decreasing rent prices.

>You're going to have to point out where you posted anything approaching a valid refutation; I must have missed it.

>>76860

>>76868

>>76829

>>76829

Bits and pieces repeated in the above

>>77295

>The fed lends money to private banks.

Which is not what quantitative easing is. Which is also not the other primary method of direct money creation.

> Lending money that you don't own on the hope that the imaginary money you print won't end up back in your vaults is not, it's counterfeiting.

Its not counterfeiting. No money is produced. As long as you don't say you keep it all its not even fraud.

>Pic related. Take a look, it's in a book.

Its in the UNDERSTANDING OF CONTEXT THE BOOKS ARE ABOUT

>All of those years of absolute financial security, truly the worst of all worlds.

Judge the risk you are willing to take and take it. Higher risk higher reward.

>Rich people take loans, too.

And it allows them to build houses to rent to people they could not otherwise.

>Will they? The bottom X% of people still won't own houses.

Then they can rent, no damage caused.

>Except it will be more expensive since more people will be renting,

No less people will be renting because people will have bought homes with their loans.

>Only after 40+ years, unless you're counting on riding a housing bubble.

Amortized its cheaper and over the full time its cheaper.

>Your own numbers show 80+ million renters of a single race in a single country.

thought we were talking USA here. In which case a bit over 100 million max rent.

>It's a bit disingenuous that you're talking about how cost effective renting

Its not cost effective, renting can just be made cheaper with landlords getting loans to build more houses.

>None of those was a direct challenge to anything I laid out in that post

Read them again