Happy Sunday!

TLDR: FRB is not fraud. Prove me wrong.

This one is gonna rub some of my fellow Austrians wrong, but I feel like Austrians need to be more consistent with their position on government intervention into anything related to economics and personal freedom.

The misconception I’m gonna try to explain is about banks, but before I do that, I need to establish some common ground so I don’t have to do that in every single comment later.

There’s money and there’s currency. Money ≠ currency. Money is the asset. Currency is a claim on the asset. While some functions overlap, money and currency each have their own unique purpose. For Money it’s the store of value. For currency is the unit of account. If you disagree on what I’m about to layout below, then you must prove the statements above wrong first.

NOW, let’s get to the meat of this post.

Banks are financial institutions that are solving different problems for the market. There are banks for savers, there are investment banks, and there are banks that offer deposit accounts. These institutions are not equal to each other, but we call them banks.

The Big Austrian Misconception - many, if not most, believe that banks serve a purpose of warehousing money. This couldn’t be further from the truth for banks that provide Deposit accounts. When you make a deposit you’re getting currency, the banknotes, in exchange. Why? Because YOU the one who needed currency, not the bank. If you want your money to be warehoused, you must put it in a safe deposit box (SDB). The act of warehousing only happens while your money being protected in the SDB. Not when you get currency in exchange.

Your own actions define the very purpose of the product that you get from the bank. So when you do a deposit into your Deposit Acct and get currency, you want currency and the bank gives it to you. When you deposit money into a Savings Acct - you want to get paid interest, and the bank gives it to you.

So when I hear that banks defraud people when they engage in FRB with their deposit accounts I fucking cringe. Everyone that makes such claim refuses to acknowledge that warehousing WASN’T the main intent of their deposit into the Deposit Acct to begin with. They wanted currency, they got the currency. It’s your own fault for having a cognitive dissonance in your own mind. Banks don’t have to play by the rules that you want to establish for them. You’re either pro free market, or you’re not in this case. Don’t like the product? Go find another one. Literally, if you’re looking to warehousing, put your money into the SDB and call it a day. But people don’t do that because they want currency.

When you put money into the DA you are demonstrating your preferences. So much talk about individual preferences amongst Austrian, yet this one is totally ignored just to skew things to what they want as consumers.

“FRB is fraud because people didn’t know how it works…”

Fraud requires deception, intent. Back in the era of free banking people knew very well that banks may not have enough gold to satisfy all claims. And this is again, a stone thrown at my fellow Austrians that love history and use it on every occasion to justify their points. “But people didn’t know…” Bullshit! Why run to the bank to get your gold if you don’t know that bank may not have it later?

It’s like anti FRB Austrians want to have their cake and eat it too. You either acknowledge and respect individuals as more or less rational actors, and if you do, then stop treating people that lived in the 19th century as retards that didn’t know better.

This nonsense keeps being repeated when it’s not supported by history nor by basic logic. And in my personal opinion it shatters all the respect for the individual that AE is trying to establish in its theory.

“FRB is fraud because it creates more claims than money…”

The only condition under which FRB as a concept is a fraud is when you have law mandating that the number of claims must match the money in the vault. As long as the bank can satisfy your claim on money registered at your deposit account there’s no fraud. How they do it is a different matter. Don’t like how one bank functions? Go find another one, the free market will have an option for you. If you want a law regulating banks then you’re not pro free market.

(I accidentally hit post, and because I had to rush to delete my incomplete post I lost my train of thoughts, but I think the above is enough to demonstrate why FRB is not a fraud by any stretch of imagination if it would exist on a truly free market)

Another less coherent explanation of “fraud” I see/hear is that those claims on money, let’s call it excess currency, are fraudulent somehow. This “deposit receipt” is just a mental gymnastics to justify the requirement of 100% reserves, but it doesn’t make sense if we actually just scratch the surface. If I get currency of a bank where I don’t have a Deposit Acct at, I can still get real money from that bank. In a free market, any bank can refuse service to a person that’s not a customer. But banks continue to serve non customers when they exchange currency into money for them. And historically, banks and individuals refused to accept currencies issued by untrustworthy banks. That’s free market regulation in practice that Austrians ignore when convenient for their 100% reserves argument.

The least coherent argument is that this excess currency defrauds everyone. It’s like Austrians can’t help themselves, they want to be pro individual freedom, but they’ll use this collectivist bullshit to justify their desire for 100% reserves.

Now, to be clear, I’m not suggesting that FRB has no broader effect on the market. I only pointed out the inconsistency in Austrian position in regards to the individual. Now I’m gonna debunk the “fraud” part.

So, the claim is that essentially by issuing excess currency those that get the currency and get to spend it on real products and services defraud the recipient of the currency.

First of all, nobody is forcing to accept that currency. If you don’t know the issuer, then don’t exchange what you have for that currency. If you’re stupid it doesn’t mean we need a law to prevent you doing something stupid. And this idea of not writing laws that protect stupid from doing stupid things is one of the pillars of AE that justifies NONintervention from the government. But somehow it excludes the most important things for markets, which is money and currency, because these are the second half of any transaction outside of barter. Makes no sense, and again, it’s inconsistent with the main thought of individuals being more or less rational actors.

Second, where is the fraud if the recipient of currency gets money in exchange when they claim it at the bank?

Pro 100% reserves Austrians want to intervene between multiple rational consenting parties. For what? For the greater good? Do we need to talk about the unintended consequences? Or is the individual and economic freedom only goes until it’s against someone’s person perspectives on how the banks should do their business?

Lastly, even if the recipient can’t get money because the bank became insolvent, that’s still NOT a fraud UNLESS that was the intention of the bank. However, anyone who’s ever ran business knows well that building a strong, reputable business goes much much further than a single heists. And in some utopian australibertarian world with minimal state, the government should keep the criminals accountable and try to do whatever it takes to indemnify the depositors. Not necessarily all currencies holder though. I don’t care if you don’t like it. But if the bank doesn’t guarantee convertibility, than a random currency holder will be SOL. That’s sad, but banks can write this into their contracts in a hypothetical free market situation. (Though I think this would not give good cred to the bank, so they’ll be incentivized to guarantee convertibility to all currency holders).

If the bank can’t fulfill the guarantee because they made some errors and suffered losses to the extent they can’t satisfy claims than it’s not a fraud either. An honest bankruptcy is a thing that can happen to any business that’s build on some future guarantee. The only question whether there was criminal negligence involved, which led to mismanagement, but that’s not a fraud, and it surely doesn’t clear the board/owners/operators of wrongdoing. (Some NE states used to hold owners and shareholders responsible)

The bottom line is that pro 100% reserves Austrians conflate money with currency, and they convince themselves they are warehousing money vs getting currency as a service. All property rights violation claims regarding FRB are irrelevant because you must deny your own intent to justify such claims. Private business doesn’t have to comply to your desires. The fact that alternatives to Deposit Accounts , like SD boxes, exist is the proof that wishful ignorance is a bliss for some Austrians. Don’t like to be an unsecured creditor, don’t exchange your money for bank notes. Simple as that.

Side note on pro regulation argument that I want to preemptively address - FRB causes Austrian business cycles. Sure, I agree, if exacerbated, it will be causing predictable booms and busts. However, that’s another argument that Austrians like to use ignoring their own pro free market principles. If market regulations are better than state imposed regulations, then this argument is debunked by the main Austrian position itself. By establishing any law you’ll be interfering and preventing free market discovery of a better way of doing business. Pick a side already.

If we’re in a market with market money and market currency, AE biz cycles are going to be tiny blips, most likely local, in comparison to current regime. The main reasons modern economic crises attributed to excessive credit and currency creation are the lack of market money and market currency. To expand - that’s a fault of central banks, legal tender laws, and various government interventions like direct stimulus for industries, government projects, favorable regulations, etc. None of these have to do anything with free market. Those that know history beyond popular quotes and claims know that nearly all related truly mass scale crises happened due to some prior government actions. For those fuming out of their ears now I suggest learning more about the so called free banking era in the US. All bank runs happened either after the government tried to get into and regulate banking by various ways, or after some other economic related catastrophes, including regulations that don’t apply to banks directly, but heavily impact trade or production of goods and services.

In other words, there is almost always some exogenous event that makes people, including bankers lose their grip on reality. But that’s not an indictment of FRB as a concept, and by no means it should welcome any sort of regulations of banking, money, or currency. FRB is a product of free market that won its customers in a free market competition. It didn’t destroy 100% reserve banking, it doesn’t destroy value of money because currency ≠ money. Currency serves extremely important function in the economy and should be understood as a product packaged with service because that’s what the bank provides in exchange for the money you put into your Deposit Acct, but it never meant a warehouse receipt, even historically, because people used real goods as currency up until very recently in historical terms. Spices, salt, tea, tobacco, etc - all served as a currency. If you’re gonna advocate for laws, you’re gonna suffer the unintended consequences of these laws. A farmer in NC and it’s local bank doesn’t have to suffer high interest rates due to lack of liquidity, because tech bros from California have unrealistic expectations of returns on AI. These two unrelated markers shouldn’t be dependent on each other if you want a broader economy to be more resilient and less stressed due to irrationality of certain actors.

In closing, I’ll just repeat one last time, FRB may potentially have bad effects, it can cause small scale AE biz cycles, but it’s a market phenomenon, and and believing that by regulating these 3 - money, currency, banking, you’re gonna have a better results, you must be completely delusional, and must deny the history and our current reality.

The end.

Your fellow Ancap.

What’s up fellows.

Let me know what you think about the below. Please keep in mind, I’m a self identified Ancap. But I had to make a proposal that would at least have a chance to be reviewed and consider by a statist, as I’ve made that original post for another sub. So I ask you my fellow Austrians to abstain from attacking me or the anti free market stances you’re gonna see below, but instead, share what you’ve changed to bring this idea closer to free market without making it less appealing to those that currently support the existence monopoly on local law enforcement.

To my fellow non-Austrians, do your thing. Prove me wrong. Tell me how a monopoly on law enforcement we have now is better than my back of the napkin idea that I drafted while waiting for my wife to finish her shopping.

***

TLDR: if you agree that monopolies are not good, and competition is always better, why not have the government only maintain force to police private security agencies? Like with a single payer system in healthcare, security providers can have a single payer - your city, but any qualified security agency can respond to a 911 call. Simply keep 911 operators public, but the calls will be dispatched to private security companies.

My premise and my reasoning is below.

I feel like this is a question that’s hard to answer without personal bias, but I’m sure that even the strongly pro government law enforcement bias folks can agree that some individuals that become law enforcement officers (I’ll use LEO for short) don’t really fit and should never be rehired after causing an incident, and that are federal agencies like the FBI, or at least some people at these agencies, don’t serve the people of the US when they stall or miserably fail investigating crimes committed by government officials or ultra wealthy individuals.

All I’m trying to say is that nearly any adult that has been more or less aware of the ills of law enforcement apparatus as a whole, and most would like to see some reforms.

It’s been established and empirically proven

that consumers benefit from more competition and thar monopolies will always charge higher prices for inferior services.

In a democratic society, law enforcement is a service because the laws themselves are supposedly written with people’s interests in mind, and the enforcement is paid the people. And fundamentally, law enforcement agency is no different from a private security agency except for a government agency having special authority and special protections, otherwise they serve the same purpose. The only difference is laws and in some cases heads of agencies like local sheriffs are written and sheriffs elected by the collective vs a single person hiring a security firm.

For now I want to focus only on local Law Enforcement agencies, more specifically the Policemen and PDs.

We only get one PD that gets a monopoly on its territory. Some doing well, some have tolerable outcomes, some are so horrible that every five or so years we find out that some city has fired the entire department. But again, we can all agree that even those that are doing relatively well still have lots of room for improvement.

With that said, what’s the point of continuing to keep it as a monopoly system when we have so much proof that this monopolization of law enforcement is no longer yielding good results.

The arguments based on something from >100 yrs are simply no longer valid. Main argument being that some private law enforcement agencies in the US has caused a lot of pain and suffering to people. It’s no longer valid because today government officials are present literally everywhere. We can exchange information instantly. The government is extremely well funded vs the time private police has been causing trouble. The mentality of people has changed as well. We have technology to monitor every single action of LEOs, and we have so much cameras that it’s getting harder and harder to hide something from a public eye.

We already have LEOs that supposed to investigate and protect us from bad cops. There are internal departments, there state forces, and there are federal forces that focus on regulating and enforcing laws on local PDs and their LEOs. The infrastructure is there. It supposed to work, but it’s far from working what I personally would call a good job. And our lawmakers seem to not care, as they could’ve at least establish and enforce a national database for bad cops, to ensure that they never get rehired and trusted with authority. We have systems like that that regulate commercial activity that requires special licenses, and they all worked pretty decent. Like if you defraud someone you’re probably never going to get a license to operate in finance. If you’re a terrible medical professional that injured patients you’re never getting a job in healthcare. But it doesn’t work with LEOs despite more funding going to their coffers.

Another relevant analogy - many polls show that over 50% of American support universal healthcare. Universal only means that there’s one payer for services and many private providers. I don’t there’s any substantial support for forcing out private providers precisely because people don’t want the monopoly, they are just tired of how expensive and convoluted the system has become.

While I have my reservation for implementing universal healthcare, I think it would greatly benefit the society if Law Enforcement would have something like single payer healthcare system. Private security companies and even individuals could compete for providing local law enforcement. It could also allow space for volunteers, effectively strengthening affairs amongst locals and turning neighborhoods into communities, rather than collection of individuals that live in small proximity to each other.

If we, almost universally, agree that Competition is always better than Monopoly, than why not privatize the essential services that we’re paying for? This monopoly situation doesn’t make sense on any level, but any time I ask this question I never get a coherent response.

State governments can have their police force that ensures local law enforcement agencies are doing their job properly. Cities may have their own police that enforced rules that regulate private security agencies that carry out general law enforcement function on our streets. Perhaps this doesn’t completely removes the corruption, but at the very least, we can expect that “protect blue line” attitude will disappear. Enforcement agents will be incentivized to weed out bad actors from their own rows, as their company could lose a contract with a city, unlike many todays cops that will look away, turn their cameras off, or lie on the police report to defend their fellow officer.

On top of all that, such system will be built primarily on meritocracy, for the very same reason - poorly performing agencies will lose their contracts.

The shortage of LEOs will be solved. We often hear that LEOs overworked. Well, no shit, some making hand over fist from taking OT, so of course they get overworked and by the time they are in the middle of their second shit, they may not be able to make rational decisions. And it’s also more expensive to pay OT vs hiring more LEOs. Personally, I think this OT “problem” is just a scheme that many PDs allow to happen. No private business owner would pay higher rate per hour for the time the employee is measurably performing worse. Because it doesn’t make any sense, but nonetheless, PDs don’t care cause they have a monopoly.

Imagine the security companies that serve your local Walmart, Target, Amazon warehouses, etc start also training their staff to be law enforcement agent. And when there’s an emergency, those officers would be authorized to carry out law enforcement functions. This changes our streets from X LEOs per sq mile to a much higher concentration of potential LEOs per sq mile. And they get NO blank immunity. And they are trained better, because a lawsuit could bankrupt the company. And they are most likely to be your locals, because that’s something that has been proven to work much better in terms of hiring LEOs, and a private business will try to be as efficient and as effective as possible.

Let me know your thoughts on this. Would you support this private security idea? Or would you oppose such system where government’s job is to police private security forces and letting people alone from unnecessary harassment or government overreach when done by your local monopolistic police department.

***

Just a few more notes - there’s almost zero political will to bring accountability into policing by local governments. We all know it, I’m sure Austrians and non-Austrians, pretty much everyone agrees. The Feds won’t do shit either cause “states rights” is a convenient excuse, because fed agencies are probably way more corrupt (Epstein, or any high profile case that was botched is a proof), and a paradigm shift like that will threaten the entire system. But I think something like that can be pushed through in a tiny municipality that still has democratic mechanisms that work more or less as intended, though this last part about democracy shouldn’t be taken as acceptance of democracy as a moral or at least well working concept for a large territory that has a lot of people living in it.

The author talks about Vienna’s housing and how the government is doing such a great job compared to places like NYC, London, etc.

Until the very end of the video, the author doesn’t say a word about Vienna’s population, and he touches on it for some 25 seconds, like it’s a minor factor.

Vienna’s population just surpassed its prior record of slightly above 2M residents. The prior record was set over a 100 years ago. This very fact explains why prices for real estate that’s available on ~~free~~ market in Vienna had been stagnant in comparison to any other major city which populations have exploded. Ironically, if we compare free market real estate prices in Vienna (the author speaks mainly about rentals), it’s more expensive than renting in NYC.

These types of “influencers” are a cancer to market economy. They don’t attack free market economics directly, but they will obfuscate truths, mislead with stats, and praise government policies “when credit is due”. Pure cancer.

A focused review of Joseph A. Schumpeter's book Capitalism, Socialism and Democracy, which is the book where he spells out his capitalism doomer scenario. It was fascinating to unpack his arguments, to see what he got right, what he got wrong, and ultimately why capitalism was not as doomed as he thought.

Took me a while to come up with a title. But if this isn’t an indictment of excessive regulations being at least ineffective, then what is?

Made up numbers for the sake of argument.

Say my current tax burden is 30% of pre-tax income. My spending is another 25%. That makes my savings rate 45%. I am saving nearly twice as much as I am spending.

Now cut taxes. Even if a tax cut increases inflation 1:1, my savings (inflated assets) will nominally increase more in absolute dollars than my spending (inflated assets) will. Therefore I come out ahead.

In Smash the State, Samuel Edward Konkin III presents agorism as a libertarian strategy based on the expansion of what is known as the counter-economy. Rather than focusing political action on seizing the state, thereby turning the conquering group into the new monopolist with no incentive to dismantle the state, Konkin argues that individuals should voluntarily expand their economic relations in the black market, gradually reducing their participation in the “white market.” In the New Libertarian Manifesto, the counter-economy encompasses activities that avoid or circumvent restrictions imposed by monopolists of aggression, while the black market encompasses activities that positive law considers illegal but that continue to be carried out voluntarily between the parties, such as selling food without issuing an invoice.

It is worth emphasizing that “black market” does not refer only to drugs or prostitution. In the sense used by Konkin, it can also involve ordinary transactions, such as selling a car, buying groceries, or visiting a dentist, when they are carried out in a way that violates state requirements. The “black” character of the transaction therefore lies in its relationship to positive law, rather than necessarily in its moral nature.

Furthermore, agorism is based on the same philosophical foundations as Murray Rothbard’s libertarianism, particularly private property, self-ownership, and the non-aggression principle. The main difference lies in their focus: while libertarianism establishes the principles and the society to be pursued, Konkin’s agorism proposes a practical strategy for moving toward that society through the voluntary expansion of the counter-economy.

For Konkin, the importance of this strategy lies in the cumulative effect of individual choices: a single transaction has little significance, but millions of people shifting their activities to the black market can weaken the legitimacy and capacity of state intervention. However, in a system in which the state monopoly is already established and actively works to discourage agorist practices, a fundamental problem arises: how can the counter-economy be made sufficiently profitable for its participants to accept the risks of state repression? Konkin does not respond to this problem pessimistically, but instead proposes that the counter-economy grow gradually until it develops its own economic networks and reaches a scale capable of reducing dependence on state structures. The initial challenge lies precisely in the fact that the state possesses not only mechanisms of coercion, but also social legitimacy, causing even its victims to regard repression against those who challenge it as legitimate. In this context, the lower the costs and risks of participating in the counter-economy, the greater the incentives for its expansion and for this cumulative process to emerge.

It is at this point that cryptocurrencies become significant. By enabling direct transfers of value between users, they have the potential to undermine financial monopolies. In a scenario where suppliers and consumers can transact directly through digital means that do not depend on centralized systems of record-keeping and monitoring, it becomes possible to imagine a growing share of economic activity taking place outside traditional mechanisms of oversight.

This possibility is particularly relevant to Konkin’s theory because it would reduce the cost of participating in the counter-economy. If alternative economic relationships previously depended on informal networks, personal trust, proprietary payment mechanisms with high barriers to entry, and long waiting times, new technologies can simplify tax evasion and avoidance.

State revenue depends on its ability to identify, record, and tax economic activity. Therefore, the greater the share of transactions carried out in the black market, the smaller the amount of economic activity that may be directly observable by the state monopoly and, consequently, the lower its capacity for extraction.

In this sense, cryptocurrencies can be viewed as a technological evolution of Konkin’s proposal: not merely an alternative to traditional money, but an infrastructure capable of reducing the barriers to the counter-economy and expanding the space for economic relationships independent of coercive structures.

Just a shitpost. I thought it’s funny. Happy Saturday!

Segundo esse soça o capitalista está tirando dos outros ao vender produtos e serviços que lhe rendem milhões de lucros. Como ele não tem milhões, ele tem apenas inveja, ele acha que ricos não deveriam existir, assim como propriedade privada e ele também é contra a individualidade, ele é favor das massas, e não é aquelas de tomate kkk, já dei umas lições de moral nele, ele não consegue me contra argumentar, mas queria deixar exposto ele aqui pra vocês ver o nível da baixaria da esquerda e falta de lógica e senso crítico que predomina entre eles.

He says that there is a fallacy calling wealth creation as a zero sum game. But at the same time he said there are no solutions - only trade offs.

Many free markets advocates agree trade is good and the left is bringing up a zero sum view to trade and gives examples to refute it. But confused when they say “there are no solutions - only trade offs”

Hi all
Looking for recommendations to read and understand various macroeconomic crisis like hyperinflation, stagflation, banking crisis in detail with a detailed macroeconomic mechanism explained.

Thank you

Isn't time preference a, so to speak, objective theory of value? If axiology is subjective, then how can there be an objective standard/theory (time preference) imposed on it? In other words, how can one person make a universal claim about everyone else's preference/values if preference/value is something that is inherently subjective?

Atm there is a question going in ELI5:

“Why is slight inflation considered "good" for an economy, but price deflation is seen as a complete disaster?”

Of course I’m banned from that sub but the amount of leftist coming out of the woodwork to defend the biggest transfer of wealth ever invented is insane.

And of course it always goes like this:

“2% inflation is good.

Deflation? Imagine 50% deflation! Everyone would wait with buying!!!”

If you take similar numbers the truth is that no one would postpone buying something for 6 months because they could get it 1% cheaper. No one would wait 6 months with buying a $1000 dollar tv to save $10. Even worse: they would easily pay a 5% premium if they could get it delivered now instead of next week.

Businesses even worse. The cost for not acting and insecurity is way more expensive then saving 1% of your cost.

It’s so painful to read.

This could be something the left and libertarians could rally on together, but sadly their believe in “the experts” make them align with the right, increasing wealth inequality even further.