Free Banking

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File: a26d91192eec328⋯.png (184.86 KB, 500x257, 500:257, ClipboardImage.png)

Free Banking Anonymous 07/25/18 (Wed) 21:30:43 No.88741

It seems most of us here agree with Rothbard that fractional-reserve banks are inherently fraudulent and wouldn't exist in a free market. Anyone take the "free banking" view, that private banks need not maintain 100% reserves, and it's not only permissible but beneficial for banks to loan out their obligations? If so, what's the answer for how such a system would work on the market? The way I see it, there's a pretty strong market incentive to maintain 100% reserve, because the moment any one bank starts to expand its credit, other banks would notice this, and it would be in their interest to cash in obligations held with that bank, and force a run. What's the free-banking response to this?

Also general banking thread

Anonymous 07/25/18 (Wed) 22:47:26 No.88745

File: eedbe825b4ed1fd⋯.jpg (13.2 KB, 255x247, 255:247, Dd6KM2xV4AAHRXx.jpg)

>>88741

>banks taking the risk of loaning money they don't have

I'm not an expert on banking, but I don't exactly see a problem with this being allowed. After enough bank runs, people who aren't total idiots would come to understand that this is a scam similar to credit cards and all deals with these kinds of banks would be treated with caution.

I'm also not a fan of "protecting the consumer" or anything like that, I'm okay with taking these risks myself, but just to be on the safe side I'd prefer having these banking practices banned in order to not get serious economic fuck ups and recessions from the much larger ones. (Even though banning them will probably lead to a black market full of mafias and sneaky Jews providing the same services illegally while giving money and power to these criminals)

Anonymous 07/25/18 (Wed) 23:12:14 No.88748

>>88745

>I'm not an expert on banking, but I don't exactly see a problem with this being allowed

Well, one additional problem besides runs is that increasing fiduciary media will increase the money supply, and has an inflationary effect. It's also the cause of the boom-bust cycle, although without a central banks facilitating it all the booms and busts would be much milder, and much more localized.

>After enough bank runs, people who aren't total idiots would come to understand that this is a scam similar to credit cards and all deals with these kinds of banks would be treated with caution.

Right, which is part of what I addressed in the OP–the way I see it there are enough market incentives against free banking to restrict its occurrence.

Anonymous 07/26/18 (Thu) 00:04:39 No.88750

File: 75aafba46a9a30b⋯.png (211.76 KB, 440x447, 440:447, 75aafba46a9a30b6cf42ed8bec….png)

>>88741

>It seems most of us here agree with Rothbard that fractional-reserve banks are inherently fraudulent and wouldn't exist in a free market.

I don't. Fractional-reserve banks are perfectly viable and actually would likely be the main means of banking in a libertarian society. The issue isn't fractional reserve banking which has been around basically as long as banks have been- all fractional reserve banking is, is only storing a fraction of your funds while loaning out the rest to accumulate money and it's very lucrative in the private sector as a means or earning interest. The issue is when a government gets their grubby mitts on it and won't let go/fuck with the bank via regulations. A good fractional reserve bank knows what fraction that need to keep to minimize risk while maximizing profits. One run by the government inherently "can't fail" and thus has no sense of self-preservation in regards to interest rates, what fraction should be loaned out, etc.

Anonymous 07/26/18 (Thu) 00:08:04 No.88751

>>88741

>>88750

As per your worries, that's unlikely. The whole point is to only loan out what you can dish out/get returned. If you have too many obligations then the free market response is that you, as a bank, will fail. This is ok as we're talking regional banks, not federally-spanning banks in most cases. Consumers have an incentive to not invest in shitty banks and any losses should be minimal unless the consumer put all their eggs in one basket. You would likely not see any sort of monopoly, though it's likely you would eventually see maybe 4 or 5 bank chains that cover 90% of consumers with the other 10% being local banks, special loaners, etc.

Anonymous 07/26/18 (Thu) 00:59:21 No.88758

File: b724e77b566ebdf⋯.jpg (44.61 KB, 462x960, 77:160, voluntaryist with shit tas….jpg)

>>88750

>all fractional reserve banking is, is only storing a fraction of your funds while loaning out the rest to accumulate money and it's very lucrative in the private sector as a means or earning interest.

That description can apply to 100% reserve banks as well. The difference is that a fractional reserve bank will give customers the impression that they have immediate access to their money while simultaneously loaning it out to someone else–if the bank had customers sign a CD stating that the money deposited into savings is the property of the banks, and they are not obligated to have it returned (with interest) until a certain date, then this isn't an issue. You could even create an analogue to reserve ratios by stipulating a minimum savings amount in place of checking account fees. For instance, if you want to maintain a checking account with the McBank™, you would have to either pay a monthly fee for their storage services, or put at least 25% of your deposits into savings. Alternatively, the minimum savings could be in quantitative terms (at least 500 McDollars in savings). In any of these cases, I'd say you aren't practicing fractional-reserve banking because there isn't any kind of fraud involved, and it's clear to the customer that he's giving the bank a loan.

Got anymore 2d ancap qts?

Anonymous 07/26/18 (Thu) 12:33:32 No.88767

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File: df864c28d6091a8⋯.jpg (37.48 KB, 403x604, 403:604, 9ef3ea8f6d5ddc464ec0da3daf….jpg)

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>>88758

>Got anymore 2d ancap qts?

This is now an ancap bitches thread.

Anonymous 07/26/18 (Thu) 12:41:49 No.88769

File: adfd52ac9821149⋯.jpg (178.32 KB, 1000x1000, 1:1, Ancap anzu.jpg)

>>88767

Anonymous 08/18/18 (Sat) 00:08:59 No.89706

>>88741

>reee banks are bad

Fucking lol @ Austriancucks.

Anonymous 08/18/18 (Sat) 00:16:38 No.89708

File: c5998141067f524⋯.png (581.56 KB, 1000x897, 1000:897, right this way.png)

>>89706

>Democratic Party

Post ancap qts or git out

Anonymous 08/18/18 (Sat) 01:13:22 No.89712

>>89708

>ancap

Literally only socialism and fascism are more retarded than ancap.

Anonymous 08/18/18 (Sat) 01:26:08 No.89715

>>89712

Jesus, is reddit down again?

Anonymous 08/18/18 (Sat) 05:33:27 No.89720

Everything should be allowed. I wouldn't entrust my money to a bank that doesn't just let it sit in a vault though. It's my fucking money, if the bank spends it what was the fucking point of storing it there?

Anonymous 08/18/18 (Sat) 14:59:10 No.89726

>>89720

You can get a % of your money added if you allow this, otherwise, yeah, just keep them in a vault physically. Both options are possible.

Anonymous 08/18/18 (Sat) 18:46:55 No.89730

File: 1b0bbf18fc7aa93⋯.jpg (18.39 KB, 271x395, 271:395, inside_iowa.jpg)