some interesting questions, and my responses

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Sent: Saturday, August 02, 2014 11:47 AM
Subject: A few interesting questions (and maybe some not as interesting)

Hi Professor Block,

I¹m immersing myself in the libertarian and Austrian arguments and I¹ve really enjoyed your YouTube videos. I’ve been very impressed with your arguments, both in the intellectual explanations and your Hamish way of delivery. Rather than spending a bunch of paragraphs praising you, I wanted to address a couple of areas that I questioned so you can hopefully provide some insight. For purposes of disclosure, I consider myself a minarchist that would be delighted to see an anarchist society come about.

1. Since the anarcho position towards criminal law focusses on compensation of the victim as opposed to punishment by the state, you’ve made the point that relatives could generally sue the perpetrator through free market arbitration and, in the case of the noble concentration camp guard, you posited the idea of being subject to the death penalty if a relative of any victim elects that option. Instead of Focusing on the logistical arguments, I am more interested in your reasoning why a relative has automatic property rights on the dead victim. While I agree there is an emotional connection and would agree that minor children can claim a financial loss, would the same hold true for parents, siblings, and more distant relatives? If a person only owns himself, would the rights of a relative only exist if the person willed them or does a non-dependent relative have an inherent right? Can the right to request anything more than financial compensation (eg. the death penalty) be assigned to anyone else but the victim?

<<in my work on reparations I assume that the parents will hand over their property to their children. Can you think of a better assumption? I can’t.

2. I’m sure you hear this often but I don’t understand why libertarians are so hostile to small government conservatives. I’ve heard your arguments that you tend to agree with liberals on 2 of the 3 legs of the stool (foreign policy and social issues) yet you feel more a kinship with conservatives. I also believe that there is much more of an alignment between libertarians and most non-Washington conservatives however I see the “establishment” libertarian (I apologize for putting those two words together) group to be viciously hostile towards conservatives and overly tolerant towards liberals. Since I see libertarians are often vicious with each other over minor disagreements, I dismiss it all as intra family arguments but I find it odd that libertarians spend more time attacking Ted Cruz than we do Nancy Pelosi. As much as admire you, I can’t reconcile the fact that I’ve heard you say you hate Milton Friedman but never heard you say you hate Barrack Obama.

<<I regard attacking lefties (on economics, my main area of interest outside of libertarianism) as like shooting fish in a barrel. At least they don’t claim to favor free enterprise. Whereas people like Friedman, Hayek, are more serious thinkers than say Krugman, and present more of a challenge. Also, they are thought by themselves and others to favor free enterprise, and I believe that product differentiation is very important.

3. Putting aside the availability of timed deposits and focusing exclusively on demand deposits, does a bank have any right to loan out or otherwise invest any portion of a demand deposit? I assume if they loaned out 10% of their demand deposit, that would still create a 90% fractional reserve and that would be fraudulent according to Rothbardian theory. If the bank could not make money of the deposits, would all demand deposit arrangements require that the banks charge their depositors instead paying them interest?

<<for a biblio on fractional reserve banking, see below

4. If intellectual property is not real property subject to any protection, does it become protectable only if it is mixed with real property? Even assuming there are no state enforced IP laws, I assume that you would expect that the IP could not be protected by contract but the physical property could be. As an example, if I develop a drug and produce pills, I can put a contract on the pill bottle creating a license that limits the use of the pill and prevents reselling and reverse engineering. However, if I write a book, someone can photocopy it while not depriving me of my original property (the paper). This seems more of a practical deficiency in my enforcement ability than a difference in fundamental rights between the situations.
o . You typically use the example of the ponytail but I would say that that does not apply since you are exposing the public to the pony tail outside of a commercial transaction. If you put a box around your head and charged me a penny to see the pony tail, I would argue that it then becomes IP.

<<I think that contract would be valid, but would only apply to the purchaser of your pill. But, suppose he loses the pill, and someone else finds it. I don’t think the latter person would be bound by this contract, since he didn’t agree to it. Do read this excellent piece on IP, particularly that part about Clem and the boys and the railroad coming through town. Kinsella, N. Stephan. 2001. “Against Intellectual Property,” Journal of Libertarian Studies, Vol. 15, No. 2, Winter, pp. 1-53;

5. If intellectual property and reputation are not protectable because they are not physical and lying about reputation is not actionable, why is lying or fraud in a transaction any more actionable?

<< in a transaction, this sort of thing amounts to fraud, e.g., theft.

6. On your comparison of abortion to eviction and analogy to kicking someone off your plane mid flight, I would suggest that that your logic support a pro-life argument more than a pro-choice one. I am attempting to avoid the traditional discussion of when a fetus becomes a life but just focus on the eviction argument.

<< my heart is with the pro lifers, not the pro choicers

o Assuming the baby was evicted without being injured in-utero, they would could be considered to be properly evicted. If medical science is at a point where the baby could survive outside the mother at, let’s say, 6 months, any proper eviction after six months would be ethical since the baby could find another home (or incubator) as long as the mother made proper accommodations. Any eviction prior to 6 months would cause their death similar to throwing them out of the plane. This would seem to reverse your conclusion that early term abortions were ethical but late term ones were not.

<<legal, not necessarily ethical.

o Even a late term eviction/relocation would pose a substantial medical risk to the baby. Wouldn’t that hit the same rights of child arguments you argue in your circumcision analysis?

<<the right to evict, private property rights are the essence of libertarianism. My circumcision analysis implies that parents who do this to their sons lose guardianship rights. Well, so does the mother who evicts.

o If the baby was injured in utero (eg. vacuumed, spine cut, etc), whether before or after viability, that would be akin to killing someone while they were in your house before throwing them out.

<< I agree with you here. The mother only has the right to evict, not kill or maim. A similar analysis applies to the dinner guest.

o Even if the pregnancy was unwanted (putting aside rape), wouldn’t it be unethical to evict a stowaway from your plane?

<<In my publications on this topic, I talk only about what should be legal, not what is ethical.

7. I believe you define new property as being homesteaded if it has been marked and mixed with labor (please correct me if ‘m missing something). I’m trying to reconcile that with the limitation that you can’t dump a can of tomato soup in the ocean and claim to own the ocean. As a more realistic example, if a man discovers a lake (for the first time) and fishes in it, does he exclusively own the lake or at least the fishing rights? Same issue with water rights upstream. Do these issues have to be decided on a case by case basis by common law or is there an clear libertarian position on this?

<<do please read this book of mine where I discuss turning public streets and highways over to private ownership:
Block, Walter E. 2009. The Privatization of Roads and Highways: Human and Economic Factors; Auburn, AL: The Mises Institute;; available for free here:;

Look forward to hearing your thoughts.

I. Anti Fractional reserve banking frb::

Interview, shows common man is ignorant of frb

Bagus, 2003; Bagus, Howden and Block, 2013; Barnett and Block, 2005, 2008, 2009; Baxendale, 2010; Block, 2008; Block and Caplan, 2008; Block and Garschina, 1996; Block and Humphries, 2008; Block and Posner, 2008; Davidson, 2008; Davidson and Block, 2011; Hanke, 2008; Hollenbeck, 2013; Hoppe, 1994; Hoppe, Hulsmann and Block, 1998; Howden, 2013; Huerta de Soto, 1995, 1998, 2001, 2006, 2010; Hulsmann, 1996, 2000, 2002a, 2002b, 2003, 2008; Murphy, 2010; North, 2009; Polleit, 2010; Reisman, 1996, 2009; Rothbard, 1975; 1990, 1991, 1993; Salerno, 2010A, 2010B, 2011.

Bagus, Philipp. 2003, ‘The Commons and the Tragedy of Banking’, November 12,

Bagus, Philipp, David Howden and Walter E. Block. Forthcoming, 2013. “Deposits, Loans and Banking: Clarifying the Debate,” American Journal of Economics and Sociology, July

Bagus, Philipp, David Howden and Walter E. Block. 2013. “Deposits, Loans and Banking: Clarifying the Debate,” American Journal of Economics and Sociology, Volume 72, Issue 3, pages 627–644, July;

Barnett, William II and Walter E. Block. 2005. “In defense of fiduciary media— a comment; or, what’s wrong with “clown” or play money?” Quarterly Journal of Austrian Economics; Vol. 8, No. 2, Summer, pp. 55-69;

Barnett, William and Walter E. Block. 2008. “Time deposits, dimensions and fraud,” Journal of Business Ethics;;;

Barnett, William and Walter E. Block. 2009. “Financial Intermediaries, the Intertemporal-Carry Trade, and Austrian Business Cycles; or; Crash and Carry: Can Fraudulent Time deposits lead to an Austrian Business Cycle? Yes.” Journal Etica e Politica / Ethics & Politics; Vol. XI, No. 1, pp. 455-469;

Baxendale, Tony. 2010. Free Banking, the Balance Sheet and Contract Law Approach; March 15;

Block, Walter and Bryan Caplan. 2008. “Walter E. Block versus Bryan Caplan on Fractional Reserve Banking.” Nov 1;

Block, Walter and Kenneth M. Garschina. 1996. "Hayek, Business Cycles and Fractional Reserve Banking: Continuing the De-Homoginization Process," Review of Austrian Economics, Vol. 9, No. 1, 1995, pp. 77-94;

Block, Walter and John Humphries. 2008. “Humphries vs Block on fractional reserve banking.” November 17;

Block, Walter versus Eric Posner. 2008. “Posner vs. Block on fractional reserve banking.” November, 29;

Davidson, Laura. 2008. “Fractional Reserve Banking Is Indeed Fraudulent,” November 17;

Davidson, Laura and Walter E. Block. 2011. “The Case Against Fiduciary Media: Ethics Is The Key,” The Journal of Business Ethics. Vol. 98, Issue 3, pp. 505-511;;; 10.1007/s10551-010-0590-2

Hanke, Steve. 2008. “Banking Crises: Plus Ça Change…” GlobeAsia, November, pp. 168-169;–Plus%20%C3%87a%20Change,%20November%202008.pdf

Hollenback, Frank. 2013. “Insuring Deposits, Ensuring Insolvency.” July 24;

Hoppe, Hans-Hermann. 1994. "How is Fiat Money Possible? or, The Devolution of Money and Credit," Review of Austrian Economics, 7(2), pp. 49-74.

Hoppe, Hans-Hermann, with Guido Hulsmann and Walter E. Block. 1998. "Against Fiduciary Media," Quarterly Journal of Austrian Economics, Vol. 1, No. 1, pp. 19-50,

Howden, David. 2013. “A Simple Math Question for Bankers.” December 28;;

Huerta de Soto, Jesús. 1995. "A Critical Analysis of Central Banks and Fractional-Reserve Free Banking from the Austrian Perspective," Review of Austrian Economics, 8(2), pp. 25-38.

Huerta de Soto, Jesús. 1998, ‘A Critical Note on Fractional-Reserve Free Banking’, The Quarterly Journal of Austrian Economics 1(4), 25-49.

Huerta de Soto, Jesús. 2001. "A Critical Note on Fractional Reserve Free Banking," The Quarterly Journal of Austrian Economics, Vol. 1, No. 4, Fall, pp. 34-35

Huerta de Soto, Jesús. 2006. Money, Bank Credit and Economic Cycles (Ludwig von Mises Institute, Auburn AL.)

Huerta de Soto, Jesús. 2010. “Economic Recessions, Banking Reform, and the Future of Capitalism.”

Hülsmann, Jorg Guido. 1996, ‘Free Banking and the Free Bankers’, Review of Austrian Economics 9(1), 3-53.

Hulsmann, Jorg Guido. 2000. "Banks Cannot Create Money", The Independent Review: A Journal of Political Economy, vol. 5, no. 1, summer, 101—110;

Hulsmann, Jorg Guido. 2002a. “Free Banking and the Free Bankers.” Review of Austrian Economics. Vol. 9, No. 1. pp. 3-53;

Hulsmann, Jorg Guido. 2002b. “Free Banking Fractional Reserves: Reply to Pascal Salin.” Review of Austrian Economics, Vol. 1, No. 3.

Hulsmann, Jorg Guido. 2003. "Has Fractional-Reserve Banking Really Passed the Market Test?," Independent Review 7/3, Winter, 399-422.

Hülsmann, Jorg Guido. 2008. The Ethics of Money Production Auburn AL: Ludwig von Mises Institute

Murphy, Robert P. 2011. The Fractional-Reserve Banking Question.” June 14;

North, Gary. 2009. “What Is Money? Part 5: Fractional Reserve Banking.” October 10;

Polleit, Thorsten. 2010. “The Faults of Fractional-Reserve Banking.” December 23;

Reisman, George. 1996. Capitalism. Ottawa, Il.: Jameson Books; pp. 954-963

Reisman, George. 2009. “A Pro-Free-Market Program for Economic Recovery,” November 20;

Rothbard, Murray N. [1963] 1975. America's Great Depression (Sheed and Ward, Kansas City).

Rothbard, Murray N. 1990. What Has Government Done to Our Money?, Auburn, AL: Ludwig von Mises Institute;

Rothbard, Murray N. [1962] 1991. "The Case for a 100 Percent Gold Dollar," In Search of a Monetary Constitution, Leland B. Yeager, ed., Cambridge, MA: Harvard University Press, pp. 94-136, and Auburn, AL: Ludwig von Mises Institute. See also "The Logic of Action One" pp. 364-384;;

Rothbard, Murray N. [1962] 1993. Man, Economy, and State. Ludwig von Mises Institute, Auburn, AL

Rothbard, Murray N. 1988. The Myth of Free Banking in Scotland, Review of Austrian Economics;

Salerno, Joseph T. Salerno. 2010A. Money, Sound and Unsound. Auburn, Ludwig von Mises Institute

Salerno, Joseph T. 2010B. “White contra Mises on Fiduciary Media,” May 14;

Joseph T. Salerno. 2011. “Dr. Joseph Salerno Explains Everything You Ever Wanted to Know About Money (But Were Afraid to Ask)”, The Daily Bell, July 3;

I am in enthusiastic support of publication of this paper, pretty much as is; well, with a minor revision. This is an important paper and deserves to be published. It is beautifully written, and makes a substantive contribution. The only recommendation I would make is that the author cite more of the literature in support of his thesis. I don't require that each and every publication on the following list be mentioned by this author, and integrated into his paper, but, at least he should be aware of this literature, and utilize more of it.

II. pro frb:

Horwitz, 2010; Horwitz and Bodenhorn, 1994; McElroy, 2013; Rozeff, 2010; Sechrest, 1987, 1989a, 1989b, 1991a, 1991b, 1993, 2007; Selgin, 1994, 1998, 2007a, 2007b, 2007c; Selgin and White, 1996; White, 1992, 1995, 1999, 2003, 2007a, 2007b, 2007c

Horwitz, Steven and Howard Bodenhorn. 1994. “A Property Rights Approach to Free Banking,” Journal des Economistes et des Etudes Humaines, 5 (4), December, pp. 505-519.

Horwitz, Steven. 2010. “My Teenage Daughter Gets Fractional Reserve Banking.” January 11;

McElroy, Wendy. 2013. “Fractional-Reserve Banking: Not Fraud, Not Folly.” May 13;

Rozeff, Michael S. 2010. "Rothbard on Fractional Reserve Banking: A Critique,"
The Independent Review, Vol. 14, No. 4, Spring, pp. 497-512

Sechrest, Larry. 1987. “White’s Free Banking Thesis: A Case of Mistaken Identity,” Review of Austrian Economics, November, Vol. II, 247-57.

Sechrest, Larry. 1989a. Review of George Selgin’s The Theory of Free Banking, Journal of Economics, Vol. XV, 196-98.

Sechrest, Larry. 1989b. “Free Banking vs. Central Banking: A Geometrical Analysis,” South African Journal of Economic and Management Sciences, November, Vol. II, 83-97.

Sechrest, Larry. 1991a. “Free Banking in Scotland: A Dissenting View,” Cato Journal, Winter, Vol. 10, No. 3, 799-808.

Sechrest, Larry. 1991b. “Banking, Central and Free”, pages 145-51, Magill’s Survey of Social Science: Economics, Salem Press.

Sechrest, Larry. 1993. Free Banking: Theory, History, and a Laissez-Faire Model, Westport, Connecticut: Quorum Books.

Sechrest, Larry. 2007. “Free Banking Basics,” The Free Radical, July/August, Vol. 76, 40-41.

Selgin, George. 1994. “Free Banking and Monetary Control.” Economic Journal 104: 1449-59.

Selgin, George. 1998. The Theory of Free Banking: Money Supply under Competitive Note Issue. Totowa, New Jersey: Rowman & Littlefield

Selgin, George. 2000. “Should We Let Banks Create Money?” The Independent Review, v.V, n.1, Summer, pp. 93–100

Selgin, George. 2007a. “Is fractional-reserve banking inflationary?” January 23. Free Market News Network;

Selgin, George. 2007b. “Notes on free banking: fractional reserves and economic development, part I” February 14. Free Market News Network;

Selgin, George. 2007c. “Notes on free banking: fractional reserves and economic development, part II” February 15. Free Market News Network;

Selgin, George A., and White, Lawrence H. 1996. “In Defense of Fiduciary Media – or, We are Not Devo(lutionists), We are Misesians!,” Review of Austrian Economics, Vol. 9, No. 2, pp. 83-107;

White, Lawrence H. 1992. Competition and Currency: Essays on Free Banking and Money. New York: New York University Press

White, Lawrence H. 1995. Free Banking in Britain: Theory, Experience, and Debate, 1800-1845, 2nd ed. London: Institute of Economic Affairs

White, Lawrence H. 1999. The Theory of Monetary Institutions. Oxford: Basil Blackwell

White, Lawrence H. 2003. "Accounting for Fractional-Reserve Banknotes and Deposits," Independent Review 7/3, Winter, 423-41.

White, Lawrence H. 2007a. "Huerta de Soto's Case Against Fractional Reserves," Free-Market News Network (08 Jan)

White, Lawrence H. 2007b. "Huerta de Soto's View of the History of Banking," Free-Market News Network (30 Jan)

White, Lawrence H. 2007c. "Huerta de Soto on Attempts to Justify Fractional-Reserve Banking," Free-Market News Network (05 Feb)

III. Ambivalent. These are of interest but there is some question as to on which side they lie:

Callahan, 2003; van den Hauwe, 2006, 2008; Williams, 1984.

Callahan, Gene. 2003. “The Libertarian Case Against Fractional-Reserve Banking,”, July 22

van den Hauwe, Ludwig. 2006. “The Uneasy Case for Fractional-Reserve Free Banking, Procesos de Mercado, Vol. III, No. 2, pp143-96;

van den Hauwe, Ludwig. 2008, forthcoming. “Credit Expansion, the Prisoner´s Dilemma, and Free Banking as Mechanism Design, Procesos de Mercado,
Williams, Jeffrey C. 1984. "Fractional Reserve Banking in Grain," Journal of Money Credit and Banking. 16 (4): pp. 488-496

Larry White and I disagree as to how to categorize these, so, at his suggestion, I’m creating a third section

9:09 pm on August 13, 2014