The only asset i really have is an IRA. I probably shouldn't worry about a bank collapse with that (I don't think I can convert that to physical gold coins anyway). So, the only change that maybe I should make is to keep about $1000 in cash instead of $20? I think that if I wanted to keep any more than that, I would need to buy a safe, and that would be to expensive to justify (for the ammount of money I have).

I said "I decided to" not "I did". Thankfully, TomCollins saved me from a pity-based initiative. I only need to make around 26 million posts this month to give J-mac a shot at parity. Unless PVN and I can get another YFZ feud goin I doubt McCain will reach parity through me and Mr. Collins. Of course, if we start that YFZ garbage up again I'll get banned in short order.

Yep.

How are you ever able to assess the success or failure of anything if you always set up this scenario wherein the gubment is always at a fault for a failure and always a hindrance, impediment, or drag on market success? Isn't there something circular in that reasoning?

In this case it is truly specious because even in your land of anarchy and capitalism you propose to have insurance companies to protect private property and capital. So, surely some bankers would get together and realize that an insurance fund would be a good idea to protect against failures and to re-assure potential depositors and thereby attract and increase deposits. If a bank failed and the fund paid off the depositor would this be a failure of AC markets or a voluntary success??

Edit: It's the free market. Of course those loans would be attempted until they met with failure. Do you really believe that free markets have some psychic ability to determine what will be successful?

The managers or "innovators" who thought it would be a good idea to take on mortgages with little documentation will be replaced by more traditional and conservative mangers who favor methods that require more due diligence I suspect.

I think a private insurer would not insure this sort of risk. It is only when the government intervenes with a non-market based insurance rate that these sorts of things can happen.

Under a free banking system, bank runs as we know it could not occur. A bank run can only occur under a fractional reserve system, which cannot survive without the protection of government. If, in such a world, customers even got a whiff of the fact that their bank was loaning out their demand deposits (as opposed to certificates of deposit, where-in the depositor explicitly gives up access to his funds and allows them to be loaned out for a specific duration), they would soon have no customers and be subject to legal action, just as would be a parking garage owner who's customers discovered he was renting out their cars during the day without their permission. Only government protection allows these sorts of shenanigans to persist.

Are you saying that a private insurer would never insure a risk that they might have to pay off?

Another question might go something like, "Why didn't the private banks get together and insure themselves privately in the 20's or before then if they are indeed so efficient?"

Enlighten me. I am not seeing why the protection of government is needed for a fractional reserve system to work. I would concede that the fraction needed to be held would be much larger than without the government being involved.

Yeah but banks that do offer 'certificates' would beat out those that don't. Plain and simple.

It matters not if customers "get a whiff of shenanigans" because it simply wouldn't happen fast enough before "governments" could sprout and prosper.

Q.

E.

D.

I'm not a heavyweight in this area, but I think that the issue is that fact that those banks are allowed to lend FAR more money than they actually have. In a free market, banks would only be able to make loans they that can actually cover. I have a feeling that banks would be far more cautions with their money if they actually had to pay for screwing up.

No. They would never insure a risk that they know they must inevitably pay off.

Because the risk of a bank run under fractional reserve banking is an uninsurable risk. A bank with such a policy could simply inflate to its heart's content, secure in the knowledge that the insurance company would have to pay when the customers eventually caught on and demanded their money. No insurance company would write such a policy, just like no insurance company will insure you against purposefully burning your own house down.

Buying gold seems complicated. I'm fairly concerned with getting scammed. I'm probably going to have to go with a gun.

I do not think that means what you think it means.

It's not complicated and you won't get scamed. Just order from kitco or apmex.

No. I am saying a private insurer would never insure a risk where the premiums they collect in the long run are likely to be equal to or less than what they pay out in claims. My understanding (someone will correct me if I am wrong) is that the failed bank made loans to people that had already shown they were likely to default on those loans.

"Q.E.D. is an abbreviation of the Latin phrase "quod erat demonstrandum" (literally, "that which was to be demonstrated"). The phrase is written in its abbreviated form at the end of a mathematical proof or philosophical argument, to signify that the last statement deduced was the one to be demonstrated, so the proof is complete."

Nope. I was right. Your fantasies matter not.

Well, there is a debate ongoing between the "competitive note issuance" crowd and the "100% reserve" crowd. I suppose that if, when you deposited your money at the bank, they said, "We're going to loan out X%, so if you want to get it back, there's a chance you might not be able to," and made it explicit, then it wouldn't technically be fraud. In such a situation, if there were no government mandated banking cartel to for maintain synchronized inflation, competition amongst banks would minimize inflation, since banks that inflated more relative to their competition will lose gold reserves to that competition (this was in fact the major reason for the 50 year push by the various banking families in the late 19th century for a government-created centralized banking cartel that resulted in the creation of the Federal Reserve system, to remove the ability for individual banks to inflate less).

However, it is my opinion that if you had a libertarian society in the first place, nobody is going to put their money into banks that dilute their notes relative to the competition at all, and hence even under the competitive not issue scenario you will end up with 100% reserve.

You can, but it's a big pain in the ass, and you can't take delivery, so for the purposes of this conversation, it's not really possible.

You deduced nothing, and proved nothing. You never do. You just try to assert your way to victory, and deliberately attempt to be as condescending and insulting as possible while you do it. You do this because you feel inadequate, because you aren't as smart as your little brother, by half.

Saying "xyz will happen because I say so" is not a "demonstration". It's an assertion.

I am not understanding why if you deposit $100 with me and someone comes along and wants to put up $200 worth of land to borrow that $100 (anyone that has played Monopoly with the original rules knows that historically it was 50% down to buy property) that I can't loan him your $100 secured by the $200 worth of land. Now when you come back for your $100 I would have to sell this mortage on the land to give you your $100, but it appears I would be able to sell it if I only made mortages that were fully secured.

No, actually it's just that there's simply no reasoning with you people.

Many people, much, much smarter than myself have been brushed aside by you and your cronies in favor of upholding your fairytail dreamscape, despite putting forth irrefutable arguments, and only to be answered back with a flurry of more circular questions.

It's demonstrated because it has already happened and is happening as we speak, or are you blind?

Oh boy. You state that loans would be made in cases where the depositor gives his explicit permission to loan his deposit out. That would create a risk. A risk means potential failure and might cause a bank run. A way to protect this is to insure the risk. Even if you didn't have the loan risk, you would still need to insure against fire, theft, or other natural disaster that could send your deposits up in smoke. Say all Chicago burned down again. Most of the banks got torched. They all had insurance, but just like the big insurers always try to do during a huge natural disaster they refuse to pay all claimants. They are taken to Court and forced to pay. They declare bankruptcy and move to Tahiti. You are left holding a bag of green ashes. But I understand where you're coming from. Nothing can go wrong in ACland

If you never loaned out deposits, then you would never be paid any interest. In fact, you would be required to pay for the privilege of keeping your money at the bank. There would be very few if any banks in this scenario. Better to dig a hole out back.

Banks are always in the business of loaning out deposits and earning a return. They are the engine of commerce. You wouldn't be typing on your keyboard, eating filet mignon, or drinking Belgian Budweiser if it weren't for an aggressive banking system. Now that we have the riches and financial benefits of an integrated banking system, it may seem like a good idea to climb under a rock and tell everyone to leave you alone, but it is sorely short-sighted. You would really prefer that we disengage from an interconnected international financial system in order to just be left alone and not pay taxes? Why don't you consider moving to the deep forest, sub Saharan Africa, or a desert island? Every time I look into that land of ACers I get the feeling you really want to live in a cave and carry a big club.

If that's the arrangement you have, then great. But that isn't fractional reserve, since you cannot actually have your money on demand; they have to sell other assets first to get the money to pay you. If that's not the arrangement you had, then you've been defrauded. What if I parked my car in a parking garage, and the garage owner rented it out, accepting some guy's Rolex as collateral. I want to leave early and my car is gone. The fact that my car is "backed" by the Rolex and might eventually be returned to me does not change the fact that I've either been defrauded or robbed, depending on your semantics.

By the way, the problem with "backing" notes with non-specie is that it is only specie that the notes are denominated in. What does "$200 worth of land" mean? What if the value of the land has fallen in the interim, and nobody is willing to buy the mortgage for the amount you owe me? That's the scenario the banking system is facing right now.

But that doesn't have anything to do with anything we're discussing.