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The Libertarian Blog of Stephan Kinsella
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June 12, 2006
Objectivists on Fractional Reserves:
My post on NoodleFood is below in case they delete me:
I have learned a great deal about this topic from some debates among Austrians in the RAE and QJAE, e.g. (all available at www.mises.org if no link provided):
Hoppe: How is Fiat Money Possible?-or, The Devolution of Money and Credit
http://www.mises.org/journals/rae/pdf/rae7_2_3.pdf
Rothbard: Aurophobia: or, Free Banking on What Standard? A Review of Gold, Greenbacks, and the Constitution, by Richard H. Timberlake
http://www.mises.org/journals/rae/pdf/rae6_1_4.pdf
Hulsmann: Free Banking and the Free Bankers http://www.mises.org/journals/rae/pdf/rae9_1_1.pdf
also: http://www.mises.org/journals/jls/18_3/18_3_3.pdf
Block: Hayek, Business Cycles, and Fractional Reserve Banking: Continuing the De-Homogenization Process
http://www.mises.org/journals/rae/pdf/rae9_1_3.pdf
and on the other side:
Selgin & White's In Defense of Fiduciary Media-or, We are Not Devo(lutionists), We are Misesians! http://www.mises.org/journals/rae/pdf/rae9_2_5.pdf
As I mentioned in this thread discussing some Objectivist economic views ( http://blog.mises.org/archives/003091.asp ), unlike Hoppe, Hulsmann, Rothbard, Reisman, et al., I do not see fractional reserve banking as being necessarily *fraudulent*. As I wrote, "If it is disclosed clearly enough, I am not sure I see any fraudulent act being committed. I would need to be persuaded there is a given, concrete person who is a victim of fraud necessarily, due to fractional reserve banking--and a given coherent, precise definition of fraud given."
That said, I am convinced by the arguments of these writers that fractional reserve banking makes no sense economically and could not work. To me, it is an attempt to get something for nothing; and it makes the mistake of conflating money (and the money supply) with actual wealth (e.g. produced goods). There is a difference between saved money, and invested money. If you want to let 90% of your "deposit" be "loaned out" fine, but then it is really a type of investment, not savings, and cannot be a genuine deposit. 
June 2, 2006
Rand and Rights:
Some recent thoughts. I have over the years re-thought the coherence of Rand's argument on rights. (Re Rand's epistemology--always thought a lot of it made sense, in common-sense, broad outlines, or when she was critiquing others; OTOH I tend to think she greatly distorted Kant.) Much like I've re-thought her argument for patents. Both of them seem sensible at first but the more you think about them the more they don't hang together.
Re rights I think the problem is you really can't derive an ought from an is. Her flip comment that what a thing's nature IS determines what it OUGHT to do is a non-sequitur. You have to have a "moral leap," in my view; which she in a sense agrees iwht, by saying that all ethics is based on the original (and a-moral!) "choice to live". In my view, likewise, there is no categorical, natural-law "non-aggression rule." Rather, I think it is the case that those people who do (for whatever reason, or, yes, "whim") happen to personally value civilization, peace, cooperation, and who therefore seek to justify proposed uses of interpersonal violence--that the non-aggression rule emerges. And the most consistent among them are libertarians. I.e., rihgts are sort of hypothetical. But tha'ts okay. I think many Randians and other libertarians would be reluctant to admit this b/c they want a "drop dead," "good for all time" argument. But even if you had such an argument: still, people have free will, and some people would choose to act immorally anyway. So there is no "penalty" for admitting civilized ethics are hypothetical; none at all; they are no "stronger" than categorical or natural law ones; and they are easier to justify--you just appeal to the baseline sense of morality that is already adopted by any fellow participant in civilized discourse. And if they are not such people, they are like animals, outlaws, criminals, which exist even if you had a knock-down argument.
I have some draft material on this which I plan to publish whenever I find time to clean it up.
Interesting post: Re-Evaluating Ayn Rand. Also, Scott Ryan tells me that he deals iwth some of the non-sequiturs and fallacies of Rand's defense of individual rights in the last couple chapters of his book, Objectivism and the Corruption of Rationality: A Critique of the Epistemology of Ayn Rand, which I have not yet read.
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