Fractional reserve banking requires a state

The state can protect the banks. If there is not a state then banks must fail if there is a bank run and there are not sufficient reserves... fractional reserve banking is impossible if there is not a state. It is only if there is a state and subsequently deposit insurance that banks can be immune from failure. Banks can fail if there is not a state.

If there is a state there can be deposit insurance. There can be no deposit insurance without a state.

If banks can't fail (then) they can print money

Deposit insurance is criminal

It is criminal that any organisation cannot fail... and in the context of banking for banks to have deposit insurance is criminal. It is criminal for banks to have deposit insurance because this means they cannot fail and an institution which cannot fail can print money (if there is a fiat currency). Banks can print money because they cannot fail... which is a crime. It is a crime to give banks deposit insurance.

There is frs (state) but not frb

Nothing of value can be printed out of thin air. A share in a company can be thought of as a token of value but only because we recognise it as a symbol of ownership of the company. It is not the share itself we value but the legal entitlement it represents. But with fiat money we do not own a piece of a viable company we own a piece of the government which doesn't make a profit. So fiat money is worth nothing because it symbolises only the ownership of the government. The problem with fractional-reserve banking is that lending entities are able to create wealth (through inflation) when they make loans. They are printing money just as the government does and it is only because of the ability of the government to print wealth that banks are able to do so. Without fiat money fractional-reserve banking is impossible and so we can deduce that soon frb will be impossible... since fiat currencies do not last forever. Non-fiat 'hard' currencies make it impossible for banks to engage in fractional-reserve banking because in the event of a bank run it would be impossible for the bank and the state to return the deposits. Hard currencies prevent fractional-reserve banking.

Deposit insurance is not a right

If customers have loaned their money to a bank in the form of making a deposit they have no right to expect the taxpayer to protect them. If the value of bank credit rests on deposit insurance this means that without taxpayer support a person's savings are worthless. But we have no right to expect other people to protect our savings... if we take this expectation to the absurd conclusion we can see that someone could fraudulently make a loan to an accomplice and then claim a taxpayer refund when the loan goes bad. It is a false concept to think that we have a right for our investments to always be guaranteed by the state. If we have taken a risk with our money we have no right to socialise the losses which is why there is a problem with deposit insurance. Bank customers have no right to expect other people to protect their deposits.

Deposit insurance is not socialism

It is strange to be a socialist if the government you support prefers to subsidise the banks than the people. If the government protects the banks by providing deposit insurance it is helping them at the cost of the rest of the economy so it is helping banks at the cost of everyone else. Since there is deposit insurance we can say that to support the government is to support the banks at the expense of the poor... socialism doesn't help the poor if there is deposit insurance. Deposit insurance doesn't help the poor and if the government supports deposit insurance then it is not socialist (if socialism is good for the poor). If the poor benefit from socialism then deposit insurance is not socialism.

Deposit insurance is criminal

There is no reason for the government to provide deposit insurance to the banking industry... it is perfectly possible for banks to fail. The consequences of bank failure are not worse than to perpetually 'save' the banks. If the banks are saved this causes inflation which is borne by the rest of the economy even though they have no true liability (culpability). Those who suffer from the inflation are not the cause of it in the sense that they did not invest in an insolvent bank. For the government to provide deposit insurance to the banks in these circumstances is to take wealth from the rest of the economy and give it to insolvent banks and their customers... which is a crime. The government is criminal if it provides deposit insurance to insolvent banks. It is criminal for the government to provide deposit insurance.

We are slaves if there is deposit insurance

To be in an economy where a private entity such as a bank is able to increase the money supply and cause inflation is a form of slavery. If there is a government and fiat currency then the liabilities of the government are owned by everyone and the government has a responsibility to make sure it does not issue too much currency. If fiat currency is credit of the government then it is also the credit of the people... when the government issues credit (cash) it is issuing liabilities of the people. If private banks are also able to issue currency then we can consider this situation to be a form of slavery. (For a private company to have the right to issue the credit of the people is to own the people). In an economy with a fiat currency that currency becomes a form of objective wealth... to be able to print money is to be able to issue wealth out of thin air and so if others have this ability and not ourselves we are a slave to that person. If banks can print money they 'own' the rest of the economy and the rest of the economy is a slave to the banks.

There is frg but not frb

It's not really true to think of a concept such as fractional reserve banking... banks cannot do this on their own... they can only do 'frb' with the assistance of the government. So this practice (where it exists) should properly be called fractional reserve government. Fractional reserve banking is a false term because it implies the practice is possible in a free market without the assistance of the government. Only the government can expand the money supply by making loans so only the government can exist with less than full reserves. Only the government can do fractional reserve banking so it should be called fractional reserve government.

It is inevitable that the banks will collapse

To deposit money in a bank is similar to giving money to the state and expecting something in return in each case we give up wealth on the understanding that something is owed to us in the future. But if we cannot provide our own security (from theft) why should we 'trust' the banks... if the banks are more secure than any security that we ourselves can provide then there would be no reason for the banks to return the money since they are more powerful than we are by definition. Like the state the banks are much more powerful than the individual who uses the banks and so there would be no real reason for the banks to repay the customers other than a failure to receive more deposits (in the future). So if the bank returns your money this is entirely voluntary on their part... they are doing you a favour since they are more powerful than you. Banks have no reason to be loyal to their customers and it is likely that the banks will default on the credit owed to their customers... certainly in the situation of them being unable to pay for having made (bad) loans. If the banks are insolvent they certainly will not be in a position to repay the debts they have created. If a bank practices fractional-reserve banking it is insolvent and will be unable to repay the credit it has created whether it is powerful or not. And neither will the state since to monetise the bank credit with new money is the same as to default on the debt. As soon as the bank causes inflation by making a loan with deposits (which are still considered viable) it has entered insolvency and will be unable to repay the debt. Since most of the loans are false and will not be returned in kind we can say that the bank will be unable to return customer deposits. The banks will default on the credit that they have created... eventually. There will be a default of the customer deposits either by outright refusal to pay or a monetisation of the loans... the banks will collapse since they are not solvent.

Banks have private assets

It should be illegal for any organisation which cannot fail to increase the money supply... unless they are the government and they are knowingly and deliberately causing inflation. It is perfectly possible to imagine an economic system whereby we encourage the government to increase the money supply from time to time. Part of the reason this might be good is that it would reduce the negative impact of debt on the borrower. So it might be good for the government to increase the money supply occasionally but there is little justification for private firms which are not the government to print money. Also there is little justification for other non-bank parts of the government to print money such as schools and hospitals. We do not imagine that it would be a good idea to make each school and hospital similar to the central bank with the ability to print money. Such a privilege should be held centrally by the government to make sure inflation does not get out of control. Not all parts of the government should be able to print money. If a bank has deposit insurance then it is part of the government and (in theory) has the ability to increase the money supply. If we want to protect the currency we should make it illegal for banks with deposit insurance to make loans and increase the money supply. Unlike the rest of the public sector banks have private assets which means that it is inconsistent to enable them to print money because they are making a private profit and do not claim to be acting entirely in the interests of the country as a whole. Even if they have deposit insurance banks are still not like the rest of the public sector (they have private assets) and so they should be constrained from printing money. Only those parts of the public sector without deposit insurance should be able to print money. Banks should not be ale to print money because they have private assets unlike the rest of the government. Only those institutions which do not have private assets (all assets are public) should be able to print money. No private organisation should be allowed to print money. Banks should not be allowed to print money because they have private assets. Only the entirely public sector should be allowed to print money and since banks are not (fully) public they should not be allowed to print money. Banks are not public and so should not be allowed to print money. An institution with private assets is not part of the state.

The banks are not the state

We can regard fiat money as money issued by the state in return for security from crime. The state issues fiat money and we can think of these as tokens which represent a unit of security which has been provided by the state. So then it is normal and consistent for the state to be able to issue this type of fiat money. We would not expect a private firm such as a bank to have the same right to issue this money because it has not provided any such security to its customers. It has (perhaps) provided a free-market service such as banking but it has not provided any security in the manner that security is provided by the state and so we would not expect banks (or any private firm) to have the right to print fiat money. There is no reason for the state to give to the banks this special privilege. If banks do not provide an essential security to the people as is provided by the government then they have no reason to be able to print money. Banks are not part of the state and so it is inconsistent for them to be permitted to print money... only the state should be able to print fiat money because it is only the state which provides freedom. The state provides freedom so it should be allowed to print money but not the banks because they provide no freedom only a service... which is not the same thing. The banks are not the state and so they should not be allowed to print money.