(Banking Reform) '..a 100% reserve system .. fractional reserve lending is fraud.'

"By the very nature of fractional Reserve Lending, banks cannot honor all its contracts". - Rothbard

<blockquote>'For starters a 100% reserve system is indeed a "particularly libertarian solution" for the simple reason fractional reserve lending is fraud.

If I lent you a house that I did not have ownership of (or rights of control to), I surely would be convicted of fraud. If I sold you 100 tons of wheat, and only had 10, I likewise would be convicted of fraud.

..

Logically, two people cannot have the right to use the same money at the same time, whether they agree to such a scheme or not!

..

Since checking accounts represent money on demand, banks could not lend them at all in a 100% reserve system. Such deposits would indeed be risk-free. They would be fee-based, but without risk.

Want to collect interest on CDs? OK, but such deposits would no longer be risk-free.

Notice that a run on the banks in a full reserve system is not likely. 100% of demand deposits are always available. And term deposits would match term-loans and no longer.

Of course, banks can foolishly lend money and not be able to return it at the end of the period. But that is the risk people take when they lend banks money. If people do not want to take those risks, they can leave the money in checking accounts and pay a fee for storage.

For more on the case against Fractional Reserve Lending please see
<blockquote>Fractional Reserve Banking by Murray Rothbard.

Case Against The Fed by Murray Rothbard</blockquote>

Please click on the second link above and read it.

On page 46 of the book Case Against The Fed Rothbard says "By the very nature of fractional Reserve Lending, banks cannot honor all its contracts".

Does knowingly entering a contract that one cannot possibly honor, constitute fraud? Of course it does.

I have talked about these issues many times before. For a synopsis, please see Central Bank Authorized Fraud; Fractional Reserve Lending Problems Go Far Beyond "Duration Mismatch".'

- Mish, Is Risk-Free Banking Possible? What About Fractional Reserve Lending? 30-Year Mortgages? September 21, 2013</blockquote>


Context

<blockquote>Banking Reform

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In The Electric Universe a Future of Peace and Love

(Hapto)praxeology - '..an entrepreneurial, creative manner .. the subjective information or knowledge people create in the processes of social interaction.'</blockquote>