I've missed a few Objectivism Roundups, I see.
Objectivism Roundup #171 was hosted by Kelly at Reepicheep'c Coracle,
Objectivism Roundup #172 was hosted by Lynne at 3-Ring Binder,
Objectivism Roundup #173 was hosted by Rachel the Lady Baker at The Playful Spirit,
Objectivism Roundup #174 was hosted by John Cox at Sacred Ego,
Objectivism Roundup #175 was hosted by The Secular Fox himself down in his Secular Foxhole,
And Objectivism Roundup #176 was hosted by our most gracious uber-Hostess, Jenn at Rational Jenn!
JJM
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John, forgive the off-topic post, but another Objectivist who I respect has just blogged on fractional reserve banking and he argues that it should be illegal:
ReplyDeletehttp://dougreich.blogspot.com/2010/12/federal-reserve-heart-of-tyranny-3.html
I was wondering what you think of his argument. Perhaps you could blog on it or comment over at his blog. There seems to be a difference among Objectivists about this.
NP, Max.
ReplyDeleteThe gist of my response is that Doug is confusing the two contexts of bailment contracts and credit contracts. Under the former, the depositor does have property in the specie in the vault, and he is right that the practice of FRB when contracts are indeed bailment is fraudulent. The problem is that such an argument doesn't hold when the contract is known to be, or there is plenty of notice of it being, of a credit nature. Under that circumstance, the depositor does *not* have property in the specie itself but in a claim upon the banker. This then means there are not multiple claims on the same one thing. As I pointed out in Part Three, there is no attempted voodoo, and hence no grounds for legal action just for having more outstanding claims than cash on hand.
There are also other implications for other bank practices that the principles have to be integrated with. For instance, by Doug's line of argument it should also be illegal to lend out for maturities longer than one borrows, a broader practice of which FRB is just one peculiar instance (as commenter Andrew and I talked about). The confusion of the bailment and credit contexts thus opens the door for ever more regulation on the pretext of 'preventing fraud' - controls breeding controls.
Anyway, more later, and I will comment on Doug's blog soon.
JJM