23 December 2010

Paragraphs to Ponder

This time penned by Thorsten Polleit on Mises Daily:

Now let us turn to fractional-reserve banking. It means that a bank lends out money that clients have deposited with it. Fractional-reserve banking thus leads to a situation in which two individuals are made owners of the same thing.[3]
Fractional-reserve banking thus creates a legal impossibility: through bank lending, the borrower and the depositor become owners of the same money. Fractional-reserve banking leads to contractual obligations that cannot be fulfilled from the outset.
As Hoppe, Block, and Hülsmann note, "any contractual agreement that involves presenting two different individuals as simultaneous owners of the same thing (or alternatively, the same thing as simultaneously owned by more than one person) is objectively false and thus fraudulent."[4] A "fractional reserve banking agreement implies no lesser an impossibility and fraud than that involved in the trade of flying elephants or squared circles."[5]
The truth is that fractional-reserve banking amounts to violating the nature of the law of property rights. And so the argument that fractional-reserve banking represents sensible money economizing — an argument that Mr. Wolf brings up against a gold standard — doesn't hold water.

Is it really any wonder that current foreclosure fraud scandal has occurred in a banking system that is fundamentally fraudulent?

No comments:

Post a Comment