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Legislating Banking Confusion through Conflicting Laws

January 24, 2014
My article over at Mises Canada yesterday outlines why there is so much confusion when it comes to banking relations. It´s a product of the laws. In a bank run there are two sets of people - depositors and bankers - who both think they have a legal claim on one sum of money. Laws that allow for fractional-reserve banking ingrain this confusion in law. Both parties are in the right - bankers get to use the deposit and depositors get a right to withdraw a predefined sum of money whenever they choose. Any debates (or fights) concerning is the rightful owner of the deposited sum actually are a product of bad laws that promote conflict. How can we make banking less confusing? Just redraft the laws to remove the conflict, in other words, end fractional reserve. Read more here.

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