A question about banking in AC

[timotheeeee]

I'm reading an article by Mises about the trade cycle, and I'm a little confused. The gist of what Mises is saying is that banks loan out more than what they actually have, which manipulates the market into lowering interest rates, which in turn makes otherwise unprofitable investments profitable.

What I'm having trouble is his description of this as an 'intervention' in the market. It seems to me that people willfully interacting with these banks and accepting non-backed paper currency that is accepted by other people shouldn't be considered an intervention; to me it's actually the market in action.

Someone help me out with an explanation.

I think I know what kind of responses I'm going to get, but I'm still a little confused.

[hmkpoker]

The intervention is on the force that they use to make us accept paper money. Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver. The reason they would do this is because it prevents ridiculous investments that exist at everyone else's expense. Government regulations force us to accept dollar bills as currency, even though a free market would quickly reject it. That's the intervention.

[mosdef]

[ QUOTE ]
I'm reading an article by Mises about the trade cycle, and I'm a little confused. The gist of what Mises is saying is that banks loan out more than what they actually have, which manipulates the market into lowering interest rates, which in turn makes otherwise unprofitable investments profitable.

What I'm having trouble is his description of this as an 'intervention' in the market. It seems to me that people willfully interacting with these banks and accepting non-backed paper currency that is accepted by other people shouldn't be considered an intervention; to me it's actually the market in action.

Someone help me out with an explanation.

I think I know what kind of responses I'm going to get, but I'm still a little confused.

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I think that the idea is that the banks are "misleading" the market somehow. Even if one is willfully acting based on the information available, if the information is false or intentionally misleading then the willfulness isn't real.

I honestly don't understand the particular mechanics of what the banks are doing, so I can't say how they are being misleading. It's my guess based on the conclusions of the author.

[mosdef]

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The intervention is on the force that they use to make us accept paper money. Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver. The reason they would do this is because it prevents ridiculous investments that exist at everyone else's expense. Government regulations force us to accept dollar bills as currency, even though a free market would quickly reject it. That's the intervention.

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Even if we eliminated paper money right now, it's silly to believe that money wouldn't reemerge in a rational market. Do you honestly think people are going to go to the trouble of storing all of their wealth in material goods? "Tickets" to represent claims on goods are just easier to use. In a free market, someone would start a business producing money for people to use in lieu of goods and it would gain traction because it's so much easier.

[Nielsio]

If you start a bank and don't comply to state regulation, then you're either gonna end up in jail or dead. Same thing for school, hospital, etc, etc, etc.


Starting a bank with actual money directly endangers the current fraude banking (who are working side by side with the state). This is ofcourse never going to be allowed.

..and there we see the true nature of the state. It doesn't care jack [censored] about anyone except themselves. If they did, they *would allow competition*.

EDIT: ..and leave people the [censored] alone, when they clearly want nothing to do with you.

[hmkpoker]

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[ QUOTE ]
The intervention is on the force that they use to make us accept paper money. Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver. The reason they would do this is because it prevents ridiculous investments that exist at everyone else's expense. Government regulations force us to accept dollar bills as currency, even though a free market would quickly reject it. That's the intervention.

[/ QUOTE ]

Even if we eliminated paper money right now, it's silly to believe that money wouldn't reemerge in a rational market. Do you honestly think people are going to go to the trouble of storing all of their wealth in material goods? "Tickets" to represent claims on goods are just easier to use. In a free market, someone would start a business producing money for people to use in lieu of goods and it would gain traction because it's so much easier.

[/ QUOTE ]

The market favors more valuable goods to less. Let's say several forms of competing currency emerge, and businesses can trade in whatever they want. Bob's currency is backed by a universally recognized, hard-to-counterfeit, rigidly-fixed-in-supply commodity, while Jim's money is backed by nothing. Do you think anyone is going to want Jim's funny money over Bob's gold?

[Skidoo]

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..and there we see the true nature of the state. It doesn't care jack [censored] about anyone except themselves. If they did, they *would allow competition*.

[/ QUOTE ]

So, self-interest leads to monopoly. Very interesting.

[pvn]

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..and there we see the true nature of the state. It doesn't care jack [censored] about anyone except themselves. If they did, they *would allow competition*.

[/ QUOTE ]

So, self-interest leads to monopoly. Very interesting.

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Self interest *plus* a monopoly on violence.

[tolbiny]

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The intervention is on the force that they use to make us accept paper money. Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver. The reason they would do this is because it prevents ridiculous investments that exist at everyone else's expense. Government regulations force us to accept dollar bills as currency, even though a free market would quickly reject it. That's the intervention.

[/ QUOTE ]

Even if we eliminated paper money right now, it's silly to believe that money wouldn't reemerge in a rational market. Do you honestly think people are going to go to the trouble of storing all of their wealth in material goods? "Tickets" to represent claims on goods are just easier to use. In a free market, someone would start a business producing money for people to use in lieu of goods and it would gain traction because it's so much easier.

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The point being that there is a huge difference between a gold (or other physical entity) backed ticket and a ticket that is backed gby the "full faith and credit" of a government.

[Skidoo]

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..and there we see the true nature of the state. It doesn't care jack [censored] about anyone except themselves. If they did, they *would allow competition*.

[/ QUOTE ]

So, self-interest leads to monopoly. Very interesting.

[/ QUOTE ]

Self interest *plus* a monopoly on violence.

[/ QUOTE ]

The self-interested monopolist's best friend.