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Thread: The Return of Sound Money

  1. #91
    Quote Originally Posted by Zippyjuan View Post
    Sorry if I confused things.
    No problem

    On another note, just noticed that the article you posted is from Walter Block. He's one of the few libertarians to challenge Rothbard's fallacious argument against FRB (Bob Murphy may have as well, IIRC), which I'm personally convinced Rothbard made disingenuously (didn't like FRB for economic reasons but didn't want to admit that banning it would violate libertarian ethics), as he was far too intelligent to not see the error in the reasoning.

    EDIT: Er, nevermind, read that wrong, Block's on the other side. It was Posner taking the correct, pro-FRB position.
    Last edited by r3volution 3.0; 05-03-2017 at 06:52 PM.



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  3. #92
    Quote Originally Posted by r3volution 3.0 View Post
    Zippy, I think you're gettng mixed up responding to Wiz and myself at the same time.

    I'm arguing that demand deposits are NOT bailments.

    I'm arguing that FRB is NOT fraudulent.

    We're in agreement (as least with respect to the legitimacy of FRB).
    Quote Originally Posted by Zippyjuan View Post
    Sorry if I confused things.
    I'm really happy you to could come together in support of Fractional Reserve Banking here in a sound money related thread in grassroots central at ronpaulforums.com

    Brings a tear to my eye, really.

    Fractional Reserve Banking IS FRAUD, just like Ron Paul says.

    Just like you can't legally make a contract with two people saying you will be at two different locations at once, you can't make a contract saying the same dollar is available for two people you owe it to to withdraw at the same time.

    I'm with Block on this. It may be the norm, but liberty isn't the norm.

    If you support FRB you're disagreeing with Ron.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  4. #93
    Quote Originally Posted by r3volution 3.0 View Post
    No problem

    On another note, just noticed that the article you posted is from Walter Block. He's one of the few libertarians to challenge Rothbard's fallacious argument against FRB (Bob Murphy may have as well, IIRC), which I'm personally convinced Rothbard made disingenuously (didn't like FRB for economic reasons but didn't want to admit that banning it would violate libertarian ethics), as he was far too intelligent to not see the error in the reasoning.
    I think you are recalling incorrectly. Walter Block is the one in that article zippy quoted, that I posted, lambasting Eric Posner's attack on Walters anti-frb stance.

    So...yeah, not sure what you're confusion is here.
    Last edited by wizardwatson; 05-03-2017 at 06:48 PM.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  5. #94
    Quote Originally Posted by wizardwatson View Post
    I'm really happy you to could come together in support of Fractional Reserve Banking here in a sound money related thread in grassroots central at ronpaulforums.com

    Brings a tear to my eye, really.

    Fractional Reserve Banking IS FRAUD, just like Ron Paul says.

    Just like you can't legally make a contract with two people saying you will be at two different locations at once, you can't make a contract saying the same dollar is available for two people you owe it to to withdraw at the same time.

    I'm with Block on this. It may be the norm, but liberty isn't the norm.

    If you support FRB you're disagreeing with Ron.
    So what would your alternative to Fractional Reserve Banking be? A 100% reserve bank which is unable to make loans?

  6. #95
    Quote Originally Posted by Zippyjuan View Post
    So what would your alternative to Fractional Reserve Banking be? A 100% reserve bank which is unable to make loans?
    The act of loaning need not be attached to the act of providing a reserve banking and payment system. We're just used to them being associated.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  7. #96
    Quote Originally Posted by wizardwatson View Post
    Just like you can't legally make a contract with two people saying you will be at two different locations at once, you can't make a contract saying the same dollar is available for two people you owe it to to withdraw at the same time.
    That's not what the contract says.

    The contract says "I agree to loan $100 to ABC Bank at 1% per year, the loan being callable on demand."

    The $100 is not available to two people at the same time.

    It's available to the bank until the depositor calls the loan.



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  9. #97
    Quote Originally Posted by wizardwatson View Post
    The act of loaning need not be attached to the act of providing a reserve banking and payment system. We're just used to them being associated.
    Where does the bank then get money to loan out? Their own pockets? Or do they cease lending?

  10. #98
    Quote Originally Posted by Zippyjuan View Post
    Where does the bank then get money to loan out? Their own pockets? Or do they cease lending?
    The initial loan has to be explicit. Anyone can make a loan. This isn't some kind of magical thing only banks can do, or that by doing you become "a bank". Banks can loan their assets, which might be proceeds from explicit loans from customers.

    That you are baffled by this basic concept only shows how indoctrinated we are with the current banking establishments practices.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  11. #99
    Quote Originally Posted by wizardwatson View Post
    The initial loan has to be explicit. Anyone can make a loan. This isn't some kind of magical thing only banks can do, or that by doing you become "a bank". Banks can loan their assets, which might be proceeds from explicit loans from customers.

    That you are baffled by this basic concept only shows how indoctrinated we are with the current banking establishments practices.

    Like deposits? You stated earlier that they were explicit loans to the bank from their customers.

    Quote Originally Posted by wizardwatson View Post
    Well, technically he's right. A time "deposit" isn't really a deposit. It's a contractual loan essentially. The depositor of a C.D. for instance is loaning the money explicitly to the bank. Savings accounts are the same way assuming they are not on demand. These facilities could still exist with a 100% reserve bank, because there's no counterfeit effect.
    Last edited by Zippyjuan; 05-03-2017 at 07:06 PM.

  12. #100
    Quote Originally Posted by Zippyjuan View Post
    Where does the bank then get money to loan out? Their own pockets? Or do they cease lending?
    Let me be more clear.

    Banks have safety deposit boxes. They already perform a type of 100% reserve system doing that.

    With 100% reserve banking it's like everything is in a safety deposit box. Does that change things like using my debit card or writing a check? No it does not. Once you write a check, that's permission for the bank to debit your account and credit their own and dispense the funds to the recipient of your check. (Or use software to clear with other banks).

    It also doesn't change the practice of loaning. But anyone with sufficient capital can make loans, and typically loans require some form of collateral anyway. I doubt if 100% reserve banking came into being though that loaning services would remain so tightly coupled.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  13. #101
    Quote Originally Posted by Zippyjuan View Post
    Like deposits? You stated earlier that they were explicit loans to the bank from their customers.
    I said things like CD's "Certificates of Deposits" were like loans. But in a 100% reserve system they would have to be explicitly loans.

    I'm was talking about "time deposits" in that post as opposed to "demand deposits". Contractually a 6 month loan and a 6 month "certificate of deposit" are similar from the customers side of things.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  14. #102
    Quote Originally Posted by wizardwatson View Post
    Let me be more clear.

    Banks have safety deposit boxes. They already perform a type of 100% reserve system doing that.

    With 100% reserve banking it's like everything is in a safety deposit box. Does that change things like using my debit card or writing a check? No it does not. Once you write a check, that's permission for the bank to debit your account and credit their own and dispense the funds to the recipient of your check. (Or use software to clear with other banks).

    It also doesn't change the practice of loaning. But anyone with sufficient capital can make loans, and typically loans require some form of collateral anyway. I doubt if 100% reserve banking came into being though that loaning services would remain so tightly coupled.
    Writing a check or using a safe deposit box is not taking out a loan. You seem to favor banks being a storage place rather than a transaction place. You can put things there but they can't do anything with it.

  15. #103
    Quote Originally Posted by wizardwatson View Post
    I said things like CD's "Certificates of Deposits" were like loans. But in a 100% reserve system they would have to be explicitly loans.

    I'm was talking about "time deposits" in that post as opposed to "demand deposits". Contractually a 6 month loan and a 6 month "certificate of deposit" are similar from the customers side of things.
    You called time deposits explicit loans. And savings accounts.

    The depositor of a C.D. for instance is loaning the money explicitly to the bank. Savings accounts are the same way assuming they are not on demand.
    Last edited by Zippyjuan; 05-03-2017 at 07:51 PM.

  16. #104
    @wizardwatson, still waiting for a response:

    Quote Originally Posted by r3volution 3.0 View Post
    That's not what the contract says.

    The contract says "I agree to loan $100 to ABC Bank at 1% per year, the loan being callable on demand."

    The $100 is not available to two people at the same time.

    It's available to the bank until the depositor calls the loan.
    I've gone ahead and created a dedicated thread for FRB. You can respond there if you like.



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  18. #105
    Quote Originally Posted by helmuth_hubener View Post
    You mail a check. ACH and automatic deposit will also be options.
    Back to the thread topic.

    So to set up an account, I send you dollars. Since I am in the US (like most here- your site says there is one for overseas customers) I will be charged a fee. You issue me a debit card I can use against that money I sent you- which you use to buy gold (which doesn't really effect me- I am spending my own money I already gave you to get the debit card). I use the debit card and the balance in my account goes down. And only if I don't use all of money and want some back do I actually have anything to do with the gold. From my end, I am not really using gold but dollars. You are tracking my transactions in terms of gold (bookkeeping) but everything on my end is dollars. The stores I use the card at are not getting gold but dollars. I gave you dollars to fund the account. I pretend I am using gold for money but really I am not. I am just adding another layer of complexity and costs to the transactions.

    Aren't I better off using accounts and cards I already have and if I want to "redeem" my account for gold buying it myself?
    Last edited by Zippyjuan; 05-03-2017 at 08:10 PM.

  19. #106
    Quote Originally Posted by Zippyjuan View Post
    Back to the thread topic.

    So to set up an account, I send you dollars. Since I am in the US (like most here- your site says there is one for overseas customers) I will be charged a fee. You issue me a debit card I can use against that money I sent you- which you use to buy gold (which doesn't really effect me- I am spending my own money I already gave you to get the debit card). I use the debit card and the balance in my account goes down. And only if I don't use all of money and want some back do I actually have anything to do with the gold. From my end, I am not really using gold but dollars. You are tracking my transactions in terms of gold (bookkeeping) but everything on my end is dollars. The stores I use the card at are not getting gold but dollars. I gave you dollars to fund the account. I pretend I am using gold for money but really I am not. I am just adding another layer of complexity and costs to the transactions.

    Aren't I better off using accounts and cards I already have and if I want to "redeem" my account for gold buying it myself?
    Sure, I guess. But you like a lot of people are missing the point entirely. You take your FRN's, transfer them into gold backed currency, and then spend them at your leisure. I don't see what you're all freaked out about, I'm going to use it and if you don't want to don't. Personally I'm going to do everything in my power to deny the federal reserve any way I can no matter how trivial.
    "The Patriarch"

  20. #107
    Quote Originally Posted by Origanalist View Post
    Sure, I guess. But you like a lot of people are missing the point entirely. You take your FRN's, transfer them into gold backed currency, and then spend them at your leisure. I don't see what you're all freaked out about, I'm going to use it and if you don't want to don't. Personally I'm going to do everything in my power to deny the federal reserve any way I can no matter how trivial.
    You aren't denying the Federal Reserve anything. You are using Federal Reserve notes. Helmut is the only one using the gold. Plus the Federal Reserve processes a large chunk of credit and debit cards so you may be giving them more money.

    The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the Federal Reserve System; fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations; and interest on loans to depository institutions.
    https://www.federalreserve.gov/faqs/about_12799.htm

    You are right it is up to the individual to decide if it could work for them. If you like it, great.
    Last edited by Zippyjuan; 05-03-2017 at 08:57 PM.

  21. #108
    Quote Originally Posted by Zippyjuan View Post
    You aren't denying the Federal Reserve anything. You are using Federal Reserve notes. Helmut is the only one using the gold. Plus the Federal Reserve processes a large chunk of credit and debit cards so you may be giving them more money.



    https://www.federalreserve.gov/faqs/about_12799.htm

    You are right it is up to the individual to decide if it could work for them. If you like it, great.
    While my money is in that account it's not fiat money. Tell me why I'm wrong.
    "The Patriarch"

  22. #109
    Quote Originally Posted by Origanalist View Post
    While my money is in that account it's not fiat money. Tell me why I'm wrong.
    Only while it is in that account. The money you put in is fiat, the money you take out and spend is fiat. Unless you take him up on his gold redemption offer. But if you like the idea, go for it.

  23. #110
    Quote Originally Posted by Origanalist View Post
    While my money is in that account it's not fiat money. Tell me why I'm wrong.
    Do you ever feel like you are in the twilight zone?

    RPF 2008: End the Fed! Only gold and silver based constitutional money!

    RPF 2017: Fractional Reserve Banking is sound money. If you invest in gold and keep it as savings, really you're still using fiat currency because you bought the gold with FRN's.

    ..ugh.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  24. #111
    Quote Originally Posted by Zippyjuan View Post
    Only while it is in that account. The money you put in is fiat, the money you take out and spend is fiat. Unless you take him up on his gold redemption offer. But if you like the idea, go for it.
    I am. And while my money is in there it is gold backed currency, not fairy dust bull$#@! monopoly money created by the federal reserve. It may not be a huge game changer but it's a move in the right direction.
    "The Patriarch"

  25. #112
    Quote Originally Posted by wizardwatson View Post
    Do you ever feel like you are in the twilight zone?

    RPF 2008: End the Fed! Only gold and silver based constitutional money!

    RPF 2017: Fractional Reserve Banking is sound money. If you invest in gold and keep it as savings, really you're still using fiat currency because you bought the gold with FRN's.

    ..ugh.
    RPF's has undergone quite the transformation.
    "The Patriarch"



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  27. #113
    Quote Originally Posted by wizardwatson View Post
    Do you ever feel like you are in the twilight zone?

    RPF 2008: End the Fed! Only gold and silver based constitutional money!

    RPF 2017: Fractional Reserve Banking is sound money. If you invest in gold and keep it as savings, really you're still using fiat currency because you bought the gold with FRN's.

    ..ugh.
    True. Unless you pay somebody with gold for something. Otherwise you are using fiat Federal Reserve Notes.
    Last edited by Zippyjuan; 05-03-2017 at 09:02 PM.

  28. #114
    Quote Originally Posted by Zippyjuan View Post
    True. Unless you pay somebody with gold for something.
    Hey slippy, you are paying with gold.
    "The Patriarch"

  29. #115
    Quote Originally Posted by Origanalist View Post
    Hey slippy, you are paying with gold.
    So when you use that debit card, the merchant gets paid in gold. Does Helmut ship it to them?

  30. #116
    Quote Originally Posted by Zippyjuan View Post
    So when you use that debit card, the merchant gets paid in gold.
    Yes. And it get's transferred to FRN's at that point. That is my understanding.
    "The Patriarch"

  31. #117
    Quote Originally Posted by Origanalist View Post
    Yes. And it get's transferred to FRN's at that point. That is my understanding.
    I could be wrong but I think they are getting paid in FRNs. The "gold balance" in your account gets converted back into FRNs and that is what the merchant receives. It is only gold while it is in your account as I understand it.
    Last edited by Zippyjuan; 05-03-2017 at 09:09 PM.

  32. #118
    Quote Originally Posted by Zippyjuan View Post
    I could be wrong but I think they are getting paid in FRNs.
    Zippy, think of it as Originalist lives in Ron Paul country and Zippy lives in FRB loving Bankster country.

    Originalist opens an account at Ron Paul's 100% gold backed awesome bank, and Zippy has an account in Baby-killer Luciferian FRB Bank of the Jesuits in Bankster country.

    Just because Originalist writes you a check and some exchange is doing the conversion doesn't mean his account isn't gold-backed. It is.
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6

  33. #119
    Okay. Since it is gold backed, can I insist that Helmut gives me gold instead of FRNs when Originalist buys something from me? Or is it only convertible by Originalist into gold since it is his account? Does the gold always stay there until he has no more money in the account? If I can get gold from him, then yes, it is really gold backed. Otherwise it is just a bookkeeping thing.
    Last edited by Zippyjuan; 05-03-2017 at 09:32 PM.

  34. #120
    Quote Originally Posted by wizardwatson View Post
    Do you ever feel like you are in the twilight zone?

    RPF 2008: End the Fed! Only gold and silver based constitutional money!

    RPF 2017: Fractional Reserve Banking is sound money.
    You're mixing up different ideas.

    One can (and should) both (a) end the Fed, (b) return to hard money, and (c) allow fractional reserve banking.

    There's no contradiction there at all.

    The base money can be gold (or whatever the market chooses), and that can be the base for fractional reserve banking.

    That's in fact how banking worked in the past.

    And it worked just fine; the problem has always been state interference (chiefly by bailing out failing banks).



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