atrickpay

I agree there is nothing immoral about consensual fractional reserve banking.

And I'd like to point out that when someone puts their money in a bank account knowing that it's a fractional reserve system, that's consent. No one is forcing them to put their money there and take the interest that's being paid to them. So there is no justification to claim it's immoral.

-I go the bank to make a deposit and specifically request that they keep only a fraction of it on reserve.

-I also stipulate that I want to be able to withdraw a sum equivalent to what I put in at any time.

So, as long as both parties consent to it being done, how can it be considered fraud?

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you've address only what you , the depositor want to happen, not what the institution can actually provide.

your character has walked into a petshop and asked for a unicorn. if the petshop owner doesnt say unicorns dont exist would you consider a horse or maybe a rhinocerous, but then puts a cone on a horses head and sells it to you, you have been defrauded.

I am not an expert, but I think fractional reserve banking would not cause any problems if we had free banking in America. Free banking would mean any bank can issue currency (fiat currency or gold certificates, it doesn't matter), and consumers would be able to choose among banks. Some banks would practice risky reserve levels but offer high rates of return on deposits. Other banks would hold more reserves and get customers for whom safety is a bigger issue. Maybe some banks would hold 100% reserves and offer little or no return on deposits, or even charge a money storage fee.

I dont think that frb should be made illegal per-se, however it should not be the only (legal) option presented to banking customers when someone deposits money in a bank.  

I also have no problem with people laying claim to the same potion of money (as is what happens in frb) as long as the time periods of those claims do not overlap. For instance, take a certificate of deposit that generally yeilds higher rates than a standard savings/checking account. Once the depositor makes that time dependent loan (as it then becomes) to the bank, the claim on that money can then be transferred to another individual (in the form of a bank loan).

In this way, the market sets the rate of reserves a bank must carry by the ratio of demand deposits (savings/checking totals) vs. the ratio loans to banks (CD's, bonds, etc...) by allowing individual depositors to choose their risk level.

Just a thought.

Fractional-reserve banking IS fraudulent because the contract creates an irreconcilable conflict. You cannot have an immediate claim to 100% of your money AND allow a portion of it to be loaned out. From the article below, "two individuals cannot be the exclusive owner of one and the same thing at the same time."

You could LEND the money to the bank, where you relinquish ownership for a period of time, after which the bank is obligated to repay you (plus interest). You do not, however, have any right to the money until the loan matures, so there are no competing claims on that money at any given moment.

The following article "Against Fiduciary Media" should help clarify this issue.

www.mises.org/.../qjae1_1_2.pdf

Our Founding Father's fought the Revolutionary war in order to extricate themselves from the grip of the King of England and the frb of the Bank of England. frb is nothing but a massive money making monopoly and is an institution that is set up perpetuate back breaking national debt, the result of which is a systematic transfer of wealth from the middle class, who create all the wealth through their labor, who in the end lose it all through bankruptcy. Our $10.6 trillion! (and counting) national debt,  another "shining" example of the fruits of frb, will go down in annals history as further proof that ignorance of real money and it's function in society is the real danger from within.

  Today when we talk of this, it is difficult to get a hold of because our paper isn't backed by anything!  but consider what would be the case if (for the sake of making the math easy) behind ever $1 stood 1/1000 of an ounce of gold... or for $1,000 there was an ounce.

Now consider what is going on.I deposit 10 ounces of gold in a checking account. the bank gives me $10,000 dollars back.  the balance sheet is even, and I have the notes that represent that gold.  but now the sly banker decides to lend out 9 of the ounces to some one else, or to lend out $9,000 that represent those 9 ounces.

The bank takes it on itself to lend out my gold, when I have the gold (or the receipts to it in my possession.

I suppose a foolish person might agree to let the banks do this with his gold, and someone might borrow something from someone who doesn't own it in the first place.  so maybe there isn't a real problem with it as long as everyone knows the score... (not sure on this though) but one thing is for sure, this behavior could not last in the environment of a free market absent a central bank backed up by the Government.