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Keep Your Hands Off My Checking Account!
Like every American, my wife and I have greatly benefited our whole married lives by using free checking accounts.
But there are many interventionists who want to take away our freedom to have these free accounts, supposedly for our own good. They want to outlaw free checking as it exists today and has for centuries.
Why?
Because free checking is made possible by a kind of business process called “fractional reserve banking” (“FRB”). These interventionists want to take away the freedom of Americans to buy and sell FRB services, just as interventionists in general want to impair or destroy every American freedom that they think allows the individual to do something that they’ve decided is not good for him.
Sadly, the attack is often by people who in most other cases proclaim their support for the market and for the respect for human rights.
My position is this: No one has the right to stop me and an entrepreneur from making a voluntary, honest trade, my money for his free checking services, merely because that interventionist believes that it is for my own good.
The fact is that I am giving up something of less value to me than what I am getting: I am becoming better-off than I would have been without the trade. Likewise, the entrepreneur on the other side of the contract is giving up something of less value to him than he is getting: he is becoming better-off than he would have been without the trade.
The society as a whole has become wealthier than it would have been.
Published in General
I got an unexpected smile out of this! You’ve restored my faith in humanity.
(Apologies for my earlier tone.)
I would certainly still opt for FRB checking services–the thing that some want to unjustly outlaw–even if the State did NOT misappropriate Treasury funds–paid by you–to provide me with credit insurance on my demand loan to the bank.
I don’t know if that answers your question, or if it only partly answers it.
Without FDIC insurance, for me to keep getting FRB -enabled checking services, certainly some economic cost would have to be higher for me, like 3rd party credit insurance or higher credit default risk. Perhaps you are asking not just ‘would I keep buying FRB checking services?’ but how would I choose to pay the higher cost.
I think this exactly backwards. If banks could only loan out the dollars deposited, then deposits are more valuable and banks would pay more for checking and savings deposits. Supply & demand.
DonG,
Before I answer, please try to explain what you mean by the phrase “a bank lending out the dollars deposited”, using the following realistic real-world case.*
The bank has 1 B dollars, as a result of net receipts of dollars from stockholders, financial institutional lenders/borrowers, vendors, landlords, and depositors.
The bank lends out 1 M dollars.
Are those dollars “the dollars deposited”? Or, are they the dollars received from one of the other net sources of dollars?
*Warning: It is sort of a trick question: I know that it’s unanswerable. But please indulge me by trying to answer it anyway.
My motivation for asking it is NOT to play games, or to be pedantic, or to show you up. It is to create a base level of agreement between the two of us about what I regard as the essential feature of money so that we can proceed with a rational discussion.)