Counterfeiting of government money is a crime

If someone can print money they can buy assets (such as land) which is a detriment to the rest of the market because those products then become more expensive. It can be argued that counterfeiting is not a crime because it involves only our own property and is not aggressive, it does not affect others, so the argument goes. But if we have a need for a state (to protect property rights) then this argument begins to fall down, at least as far as the counterfeiting of money is concerned. If we counterfeit money then we have the ability to buy assets which is to the detriment of others in the market, this is not the same as counterfeiting other goods because this might be defended as a natural right, which is not the case with money.

If the state chooses to print money this is normal and consistent and not counterfeiting and so then not a crime. It is when typical non-state citizens print state money that it can be argued that a crime has occurred, because prices increase for everyone else. If the state has a right (and a need) to exist and print money then the counterfeiting of that money is crime because it destroys the ability of the state to print money, which we have accepted is a requirement, for property rights.

Counterfeiting money is a crime since the state has a right provide a stable means of exchange and to print money is an affront to their ability to do this. It is a crime because other people cannot legally print money and yet state-money will always be able to purchase goods which means that other people are being stolen from, in their inability to print money. If the state can print money then no one else can otherwise those who cannot print money will lose out. If there is state money then counterfeiting is a crime.

Deposit insurance is unhelpful to the state

It is the central bank which enables the commercial banks to attach their credit to that of the state. Via deposit insurance the broad money issued by the commercial banks is given the same value as that of the base money irrespective of the credit-worthiness of the banks. The banks are able to get into as much debt as they like and in contrast to the state they have little interest in protecting the currency. The state (we must assume) has an interest in preventing inflation because this could have a negative impact on the voters but the banks have no such concerns. The banks are able to extend the money supply to an excessive amount due to the presence of central banks and deposit insurance.

If the government allows the central bank to protect the banks in this way (and this is the major function of the central bank) than the currency of the state (the base money) will be threatened with dilution. By enabling the central bank to protect the commercial banks the state exposes its own currency to hyperinflation which would bring down the state itself in any meaningful sense. The state is vulnerable to collapse merely because it provides deposit insurance to the banks and doesn't constrain the activities of the central bank.

The central bank and deposit insurance have the capacity to destroy the government via hyperinflation because the commercial banks will issue unlimited credit if there are no constraints on them doing so.

Counterfeiting is theft from the state

In most jurisdictions counterfeiting of money is a crime. This is because the state is a legal entity which is different from other entities in that it is democratically elected and representative of the people. Since government-issued money is generally treated as valuable then it is possible to gain value by counterfeiting currency which detracts from the value of the rest of the currency and it is for this reason than counterfeiting of the national currency is a crime.

Counterfeiting is theft from the state.

Because counterfeiting is theft then when banks have deposit insurance they should be careful not to extend an excess of credit otherwise new currency must be issued to keep the banks solvent. If the banks are in the protection of the state they have an obligation to prevent the government from needing to bail them out. Bank insolvency (or even the risk of insolvency) is theft from the state if the bank benefits from deposit insurance. If banks have deposit insurance then they must stay solvent at all times (avoiding even the risk of insolvency) otherwise they are stealing from the state.

Counterfeiting is theft (from the state) and if banks have deposit insurance they must not allow themselves to become insolvent otherwise they are committing a crime (from the state). Banks steal from the state if they are insolvent and have deposit insurance.

Deposit insurance is (a form of) credit insurance

If a bank can't fail then the reason for this is that it is guaranteed by the state. The name of this insurance is usually 'deposit insurance' which sounds more benign than credit insurance. The term 'credit insurance' gets closer to elucidating (clarifying) the nature of the problem with the banking system. If credit (of any organisation) is guaranteed then this leads to inflation of the money supply. The term deposit insurance tends to refer only to banks but the problem would be the same if the credit of any firm is insured... it is not because the agency is acting as a bank that there is a problem. A deposit is only one kind of credit which is specific to banks so the complaint (or contradiction) is the 'insurance' not that the credit is a deposit and has been issued by a bank.

Not all counterfeiting is illegal

The nature of fractional-reserve banking is that banks (and their customers) are able to inflate the money supply and increase nominal prices. There is a difference between broad money and narrow money and the difference is that broad money is issued by the (state-guaranteed) commercial banks unlike narrow money which comes from the central bank. Without the state guarantee the commercial banking sector would not be able to issue money because unfunded liabilities would have no value. It is because the government is standing behind the banks that their (excess) credit has value equal to that of normal money. So when a bank issues a loan (or a mortgage) new money is being created and the bank together with the customer is increasing the money supply. And because it is the customer who initiates this arrangement then it is they who are in fact causing inflation. This a legal form of counterfeiting and so then people who borrow money are counterfeiting the currency. So then is it not always illegal for citizens to counterfeit the currency they are able to do so when they get a loan from a (state-guaranteed) bank. Counterfeiting is not always illegal since it is legal to borrow money from insolvent (state-guaranteed) banks.

Banks should not be allowed to print money

If we assume that a fiat currency is imposed by force as a result of taxation then counterfeiting that currency becomes a more serious crime than otherwise. If there is no official currency then it is not a crime to counterfeit currencies because we have a right to make pieces of paper in whatever pattern we wish. But if there is an official currency which is required to pay taxes then being able to print your own currency (to counterfeit) is an advantage which should be shared with everyone... if one group of people is able to print the tax-enforced currency then this creates a kind of apartheid where one group of people are treated differently under the law. To be able to (legally) print your own fiat currency places you above those who cannot which is a form of discrimination and is unsustainable.

To have a banking license means that your liabilities are recognised and secured (guaranteed) by the state and so then you are effectively able to print your own currency. Institutions which are able to issue their own currency are themselves quasi-state entities and we can think of them in similar terms to the more familiar elements of the public sector... but with banks they have private assets and profits which means that whilst banks have the advantages of a public entity (being protected from insolvency) they also generate profits for their owners. Banks with a banking licence cannot fail despite having private assets and profits.

There should be no banking licences because it is unfair and unreasonable to expect non-banking entities to compete in a market where some of the participants are able to print their own money. No one apart from the government (and other genuine state entities) should have the power to print money... those who can print money must be democratically accountable otherwise the state is being hostile to those people who cannot print their own money.

Guaranteed banks need the people to be ignorant

Banks are treated differently from the rest of the economy (they have deposit insurance) but the general public is not fully aware of the implications of this. People prefer themselves to banks... that is to say they do not like being in economic servitude to the banks... we can deduce this from how they (the people) react to other forms of slavery and so then we can deduce that their tolerance in a democracy for deposit insurance is either due to the fact that they do not know about it or they are unaware of its consequences. If people know about the realities of deposit insurance then they would not be tolerant of it and in a democracy it would cease to exist. The existence of deposit insurance is possible only if the people do not know about it. Deposit insurance is a secret kept from the public in a democracy.

When people find out about the nature of banking and deposit insurance they will cease to tolerate politicians who are not in favour of letting the banks fail like a normal business. Knowledgeable voters will not want the government to maintain deposit insurance and so the banks will fail when the people find out about how the banking system works... because they will no longer endorse deposit insurance.

The banks will fail when the voters become knowledgeable about banking.

Banks can't print money

Counterfeiting is impossible because no one can print money. Money must have some underlying value if it does not (as with fiat) then it is not money.

Full reserve banking is a natural right

To have anything other than full reserve banking requires support for the banking system from the state. Banks cannot practice so-called fractional reserve banking without deposit insurance otherwise there will be a bank run. It might be possible (for short periods of time) for a bank to have fewer reserves than deposits in a free market but very soon this will result in a bank run. For banks to be able to inflate the money supply to the extent which they have been able to do recently requires the support of the government.

But we have a right for the state not to support banks in this way since it is of no advantage to us (the banks are not providing a public service) and it is a cost to us. Socialism of this kind is justified only if the government is subsidising a public good such has healthcare or education. But since the banks do not claim to be primarily for the public good and since their assets are privately owned (for profit) this is not socialism but merely a government subsidy of a private business which is invalid. Even if socialism is valid this is not socialism. Neither can we claim that the banks provide a vital public utility and that despite them being privately-owned it is still in the interests of the state to protect them. If this is true then there is no limit to the extent to which this argument can be made. If the banks are vital then they should be given all the money they ask for which could be infinite and so if we are not to be owned by the banks then we cannot describe them as vital in this sense. No private firms are vital only the public sector is vital (if this concept exists). No private firm is too important to fail.

Since we have a right that banks are not subsidised by the state then fractional reserve banking cannot exist in any meaningful sense (the banks will not be able to inflate the money supply) and we will have full reserve banking. Since we have a right not to have fractional reserve banking then we have a right to have full reserve banking and full reserve banking is a natural right.

Fractional reserve banking is torture

We can define torture in this context to mean harm imposed on someone by the state for no reason. It is different from the normal execution of justice. Torture by the government is imposed arbitrarily.

Fractional reserve banking is a form of torture because it causes harm to people for no reason. We assume (as we can) that there is a fiat currency in place and that it is possible for the state to subsidise fractional reserve banking. (If there is no fiat currency then the government cannot subsidise fractional reserve banking.) So then it is possible for the state to enable the banks to inflate the money supply. This is torture because it removes value from the rest of the population who do not print money. Since there is a fiat currency in existence this extraction of wealth cannot be avoided by anyone and so this hurts everyone in the economy. There is no reason for this subsidy of the banking system via deposit insurance and so by the definition above it is torture.

The government bans things

We do not have a right to tell other people what they can and cannot do just as we do not have a right to tell them how to behave. Prohibitionism is inherently authoritarian because it relies on the state having authority over the individual. Since in a free country we are free to act however we like provided we do not hurt others then prohibitionism is inherently illiberal and statist. Authoritarianism is wrong because we have control and responsibility for our own lives. Prohibitionism is inherently authoritarian and for that reason it is wrong. If there is no government then prohibitionism would be impossible because no one would take instructions from another person. Prohibitionism relies on the existence of the state to be justified and for that reason it is false. Without the government there would be no prohibition of drugs and so there should be no prohibition of drugs. Without a state there would be no prohibition of drugs and we would be free to consume whatever we like.

Fractional reserve banking is bad

It is bad for humanity if a bank or any organisation is immune from failure and able to inflate the money supply. If someone (apart from the government) is able to inflate the money supply it is likely they will do so meaning that they will be able to acquire a surfeit of property and assets. This arrangement is bad overall and it could even be argued that it is bad for the agency which can counterfeit the currency because they are destroying the planet. (Being rich in hell is worse than being relatively poor in a healthy world.) Even if being able to inflate the currency is not bad for those able to do it it is certainly bad overall so then it is better (overall) not to have state-guaranteed fractional reserve banking.

Inflation is bad for the poor

If banks cannot fail this is a kind of communism because the liabilities are shared. If the liabilities are shared this means that banks are printing money because socialised liabilities are the same as state credit which is (presently) money. Communism is wrong because eventually the state cannot support its people and everyone will starve. If there is a state then it has a duty and an obligation not to be coercive. The state can only be defensive. The problem with deposit insurance is that it relies on coercion from the state. It is state banking.

The truth is not grey

Taxation is aggressive but it also violates the categorical imperative. In a strictly rights-based system of morality we might argue that since we have a right to our own labour we have a right not to be taxed. And whilst this is enough to demonstrate the invalidity of tax we can further show that it violates the categorical imperative because it cannot apply universally. If taxes apply universally then everything is owned by the state and we have communism. But communism doesn't work (which we know from experience) so the state cannot own everything and so it cannot tax completely. Since it cannot tax completely it should not tax at all since otherwise it would be violating the categorical imperative. (All or nothing.) We can say that that which cannot apply universally should not apply at all and so then there should be no tax. If the government cannot own everything it should own nothing and there should be no taxation.

Public banking is not essential

Only essential services should be guaranteed by the state. And whilst it will always be a controversial discussion very few people hold the view that public banking is something which is essential. Since very few people argue that the market is incapable of providing banking then we can deduce that the state should not protect failing banks and that there should be no deposit insurance. The concept of deposit insurance (and all state subsidies) relies on the assumption that society is better off with a particular service being provided to all (for free). But there is no reason to think that people need subsidised banking... since there is no reason to subsidise banks then they should be free to fail since it is expensive to subsidise banks. Unless deposit insurance is required it should not exist because it is a cost to the taxpayer and hence society. Only essential services should be subsidised (because to do so is expensive) and since the market is able to provide good banking there should be no reason to have deposit insurance.

Drug use is not a crime

No one has a right to be a prohibitionist because drug use is not a crime. By definition we cannot do a crime to ourselves because crimes involve more than one person. Even if someone holds the view that to use 'drugs' is a mistake we do not have the right to impose our view of mistakes onto other people... people have a right to make mistakes in your eyes. It doesn't matter if we think someone is doing harm to themselves with their use of drugs... they have the perfect right to hurt themselves. We do not have a right to impose our view of a good way to live onto other people.

The state is not a bank

If there is deposit insurance this means that banks are like the government and cannot fail. But there is no reason for the state to protect the banks in this way... banks could be like any other business and capable of collapse. The existence of deposit insurance indicates that the state considers banks to be like itself and of privileged status. But there is no reason for the banks to be part of the state. Banks and the state can be separate.

Fractional reserve banking is not a Ponzi scheme

If fractional-reserve banking is something different from fraud then all of the participants must be aware of how it works... and subsequently aware of the risks involved. This means that it is more like a pyramid scheme than a Ponzi scheme. With a Ponzi scheme the investors do not realise that their returns are based upon more and more people joining. There is an element of fraud involved in a Ponzi scheme which is absent from a pyramid scheme.

"Promoters also try to minimize withdrawals by offering new plans to investors, often where money is frozen for a longer period of time, in exchange for higher returns. The promoter sees new cash flows as investors are told they cannot transfer money from the first plan to the second. If a few investors do wish to withdraw their money in accordance with the terms allowed, their requests are usually promptly processed, which gives the illusion to all other investors that the fund is solvent."

If banks have deposit insurance then fractional-reserve banking (where the bank is insolvent) becomes nothing more than the counterfeiting of state liabilities. If the banks are not guaranteed then they can fail and fractional-reserve banking (frb) is a pyramid scheme. In a free market frb is a pyramid scheme.

If we assume that the debts will not be monetised when eventually the deposit insurance is tested by the depositors then like all pyramid schemes frb will fail. The banks will not be able to pay back the money they owe and they will fold... leading to hyper-deflation in prices.

Either the banks will fail or there will be significant monetisation of bank debts.

The law is not a consequence of the state

Property rights are established when someone uses force to protect a particular area or object. This means that property rights are always concerned with the opinion of people with regard to whom has the 'right' to occupy a space or have use of an object. The government is often asked to intervene when there is a property dispute such as a burglary. But it is an illusion to think that without the government there would be no property rights. After someone has been arrested for a crime (such as burglary) they may go to gaol or they may be released. It is clear to most people (certainly in 'developed' countries) that the government is far more lenient towards criminals than the average person would be. The people at large are perpetually frustrated by the government when it comes to matters of justice. The government intervenes to prevent an escalation of violence (which has its merits) but too often the end result is that there is no justice at all and the offender is released without consequence. In an anarchist system there would be no government to intervene in the dispersement of justice and people would not be able to violate property rights so easily. The government is a detriment to property rights because it prevents people from protecting themselves. If criminals are released there is no rule of law... as there would be in an anarchist system (criminals would not be released prematurely). Government is a detriment to the law.

The problem with banking is socialism

It might be a nice idea to think that when we place our money with a bank that it is guaranteed and certain to be returned. To make this guarantee possible we have deposit insurance which is a form of socialism whereby the liabilities of most banks are protected by the state. But this form of socialism - like all others - does not come without a cost which manifests elsewhere. There are (negative) externalities to this largess by the government. The result is that the value of existing units of currency is diminished because the guarantee of banks means that eventually there will either be more banknotes or there will be a default of the banking system. Whilst it might appear harsh and uncaring it would be best not to guarantee the banks (and their savers) from failure... this means that all deposits would be made at the risk of the saver and no other person. This kind of individualistic approach to banking and investment would mean that banks would not be able to disrupt the rest of the economy with inflation. It would be best for the rest of the economy to remove socialism from the banking sector.