Fractional reserve banking acceptable or not in laissez-faire system?

This is one of my comments I wrote under an article at "Laissez-faire blog" of Ayn Rand Institute

I've read your article, and it addresses only the issue of FR banks "disguising" their banknotes as fully-backed claims to gold - which would never occur in a laissez-faire capitalism with no government intervention into monetary matters. Clearly, such disguising is fraud and courts would stand ready to punish such banks on the basis of protection from fraud.
That's why in a truly capitalist system FR banks could only issue banknotes or checks with explicit information about the fractional nature of their reserves, and that's why each person willing to accept these fiduciary media would be aware of the risks involved, and possible costs from either inflation (banknotes losing purchasing power), redemption delay or outright bankrupcy in the worst case scenario (market signals would not be hampered though, so each banknote would be discounted depending on the situation). Thus, noone is forced by legal tender laws to accept fiduciary media in a laissez-faire system. Those who choose to hold gold or other specie used as money, are not affected by the loss of purchasing power, because inflation of one FR bank's notes only affects this bank's notes' purchasing power. The temporary rise in demand due to credit expansion is immediately curbed whenever a FR note is redeemed for specie, or a loan created out of FR deposit is paid off, therefore in the long run there is a monetary equilibrium.
Again to conclude - in the absence of central bank, legal tender laws and government intervention into monetary matters, that is, in the environment of full laissez-faire including money production, there is no infringement of rights in fractional-reserve banking, given that FR banks are outright honest about their practice and courts uphold the law protecting from fraud as explained in the first paragraph.

Now, I am acquainted with such literature as professor Jesus Huerta de Soto's "Money, Bank Credit and Economic Cycles" and Jorg Guido Hulsmann's "The Ethics of Money Production", and I consider myself a supporter of 100% reserve banking - as a bank client! I probably would not deal with FR banks whatsoever if I had a choice in a laissez-faire system - bearing the cost of such a behaviour. But clearly there is no argument from a rights' perspective against FRB, given all the institutional framework of a truly capitalist society, with a functional court system and no legal privileges for FRB. I cannot make myself more clear with that.

We can condemn FRB as an unnecessary, overly dangerous business practice - just as we condemn for instance extreme sports, drug use, "insider trading" etc., but these are perfectly voluntary activities in a free society, involving only willing parties and having no effect (from a rights' perspective!) on uninvolved people. Saying that an expansion in credit by a FR bank harms third parties is, as I explained earlier, mistaken. It is not even close to, for example, a case where one buys a piece of property and one day, because of fully legitimate actions of his neighbours, the price of his property falls by a significant amount - I rarely find a free-marketer who would object to such an outcome and call for state intervention or sueing of neighbours when no rights were infringed and only market forces were at work. In a free banking world, people's savings are safe from inflation when they keep them in gold or in 100%-reserve deposits, because only FR notes are affected. And nobody is forced to use FR notes. People weigh costs and benefits from using that or that kind of banking, saving and investment opportunities, using their own reason, preferences and acting on their behalf. That's the main point.

I hope this finally resolves this interesting issue once and for all.

Anarcho-communists are fascists

Here's some excerpts from my discussion with an anarchist-communist fascistic scum of the Earth:

>1. Okay firstly mate it is obvious, what one needs: food, water and a place to sleep, everything else is unnecessary.

Says who? You? I happen to disagree. In addition to food, water and a place to sleep, I need your mother to suck my cock, and I pay her cash to also wash the floor.
Other people have other needs, and as long as they exchange them voluntarily on the market, nobody has the right to tell them which of their needs are unsubstantiatied. You have disgraced yourself as a total fascist, you know that?

>2. without Earth we would not exist, not the other way round, so if anything we belong to Earth. Also you are mad if you think earth belongs to you, but not the rest of the human/plant/animal kind.

No, we don't belong to Earth, because Earth is not a person, therefore nothing can "belong" to Earth in a praxeological sense. We, humans, are the only creatures on this planet, who possess rational mind, and therefore, we create laws of conduct and have the right to appropriate the natural resources we find to serve our needs. We are the yardstick of value - not some dead matter around us, which some insane mystics like you revere as a living being.

>3. Why not try telling that to the British monarchy, Kim Jong-il or King Abdullah bin Abdul-Aziz for instance? They have not worked for it but were born to it.

And therefore they have no right to it. As simple as that.

>You are typical greedy capitalist slave lover that puts yourself before humankind and the environment.

I am not slave lover, because I hate slavery, especially when mystics like you force me to accept their insane fascistic dictatorship of "necessary needs", or slavery to the state.
And definitely I put myself, my life and the life of my closest before other humans, and especially before environment, which is a dead matter, or at most - subservient to my needs. Yet I do not destroy environment, and I do not aggress against other people nor their property. We engage in voluntary exchange, and therefore - we serve one another, lifting ourselves to higher standards of living, because any voluntary exchange is beneficial to both parties. You don't understand this simple truth, probably because as a young, inexperienced person, you never worked a job or owned a business, so you don't have any idea what serving humanity really looks like. It means producing for profit, exchanging for profit, selling for profit and buying for one's needs.

>The kind of community you want to see, would encourage the worst of humanity, greed, loyalism, classism, slavery fascism, war, rulism, environmental destruction, cultural destruction, moral destruction, destruction of individualism.

that's funny, because it is precisely the community you would create to serve your insane ideology of "necessary needs". What if some people in your community did not share the notion that owning an iPod is an unnecessary need and would engage in trade to obtain one. Would you kill them? Would you punish them in other way to ensure they would not repeat the sin of exceeding their "necessary needs"? Well, in that case you would have to enforce such "right" by creating a class of ubermenschen to keep the rest of population in order, so that the creed of anarcho-communism is observed at all times. Presto! You have created a society of slaves under the boots of anarcho-communist fascist dictator.
Can't you see how insane you are with such ideas?

Capitalism by far has been the only system which eliminated greed by supplying world with tons of goods - people stopped killing themselves for land, food and slaves; eliminated loyalism by freedom of trade and exchange, freedom of production, freedom of movement, freedom to pursue one's own happiness. Eliminated classism by freedom of occupation, freedom to own property, exchange it and do what one wishes with it; eliminated slavery by freedom to one's own life; eliminated war by global free trade; eliminated rulism by freedom to form one's own business; eliminated environmental destruction by securing property rights and making economic efficiency a key to satisfy consumers - which minimizes waste; opened a fountainhead of cultural blooming - by making poor people afford theatres, operas, cinemas etc., which were earlier only affordable by rich aristocracy; eliminated moral hypocrisy and double standards by introducing equality before the law; and finally, secured individual rights: right to life, property and pursuit of happiness, which were earlier non-existent because of the moral double standard.
It is precisely your world which would eliminate individualism by forcing people to accept the dictatorship of those who say what the "necessary needs" should be.

>If you believe that wealthy people are more intelligent and should have more rights then the average people you are very wrong.

I never wrote that. Nobody can have more rights than others. Wealthy people don't have more rights - they just made more money due to their ingenuity, hard work, entrepreneurship and wise decisions. If you condone taking their wealth from them - then you really take away their rights! You make them unequal before the law, inferior to other people, who receive this looted money.

>wealthy people are greedy have more then need and often bully, rob, cheat and trick people in order to become wealthy, they should be pitied, not be idolized.

Steve Jobs bullies, robs, cheats and tricks people to become wealthy? Warren Buffet robs people by giving them jobs? Are you fucking kidding me? You have never worked a single day in a job serving consumers, so how can you know who should be pitied and who should be idolized? Those, who utilize their talent, skills and wisdom to serve consumers by supplying them with that they need, are definitely to be idolized. On the free market, nobody robs anyone by voluntary exchange. Those, who really rob others, that is, aggress against their property, are dealt with by the police and courts - and nowadays, the biggest robber is the state, which goes unpunished, unfortunately.
In essence, you completely do not understand how economy works, and why people engage in trade. They do it to better their lives - to not live like animals, but like human beings. And those, who make other's lives the best - earn the most money.

>People should not aspire wealthy but should aspire to be honourable, honest and generous, for that is the best of humanity.

Says who? says a life-looser who doesn't know zip about how humanity strives to better itself, yet claims the right to know what's best for us. How pathetic.
People should aspire wherever they want to, as long as they don't initiate force against other people. Period. If you don't like it, just remove yourself from the civilized world - thanks to capitalism, you have the means to do it. You can afford flying to the edge of the world, and then travel into a secluded place, living on canned meat, using modern tools to build yourself a hermitage, and then you can stay there with the rest of your insane bunch. But guess what? You don't do that - because you prefer to live in this greedy society. You are an ungrateful, hypocritical parasite. I wish you die slowly.