A little while back I had another email exchange with the tireless Walter Block. The subject: The moral legitimacy of fractional reserve banking. With my permission, Block has posted an edited version of our entire dialogue. The highlight: Block asks if I've "even read the other side of this debate?" My response:
If I've published
anything on this, I don't recall. And yes, in my misspent youth
I read lots of defenses of 100% reserves. I even believed them.
If I were going
to write something on this, it would be very short. I'd probably
just quote P&M: "No administrator is needed
to prevent non-fraudulent sales; if a man simply sells what he calls
"bread," it must meet the common definition of bread held
by consumers, and not some arbitrary specification. However, if
he specifies the composition on the loaf, he is liable for prosecution
if he is lying."
In retrospect, I probably should have ended the exchange with my first reply, but as Harold Demsetz knows, arguing with Block is highly addictive.