From: S
Sent:
To: Walter Block
Subject: Against Fiduciary Media

Walter: I read your, Hans’ and Guido’s excellent 1998 paper entitled “Against Fiduciary Media”. I appreciate that the issuance of fiduciary media constitutes a fraud, in that two people cannot both own the same property at the same time. However, my question to you, which I don’t think is addressed in this paper, is this: Who could legitimately bring an action for fraud? If the depositor knows that the bank will lend out his demand deposit and that the bank is keeping less than 100% reserves against this deposit, if the borrower from the bank also knows that the bank is doing this, if people to whom the depositor writes a check know that the bank is doing this, and if investors in the bank know that the bank is doing this, who can legitimately complain about or sue for fraud? S

Dear S: Thanks for your kind comments about this paper of mine: 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, http://www.mises.org/journals/qjae/pdf/qjae1_1_2.pdf;
http://www.qjae.org/journals/qjae/pdf/Q11_2.pdf; translated into Spanish and published as “Contra los medios fiduciaros,” Libertas, No. 30, May 1999, pp. 23-73; 2011 translation and reprint in Romanian Economic and Business Review

Since you liked that one, you might also be interested in this one, on much the same subject:

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; http://www.walterblock.com/wp-content/uploads/V.345_The-Case-Against-Fiduciary-Media-Ethics-Is-The-Key.pdf; http://link.springer.com/article/10.1007%2Fs10551-010-0590-2

In my view, all those victimized for fraud may sue for it. That is, all of those people you mention.

Best regards,

Walter

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