Property ownership and fraud of Fractional Reserve Banking

Any way you slice it Fractional Reserve Banking system which is the prevalent banking system in the modern world, is a fraud and at that quite unsustainable in the long term, which is what plays a key role in the current economic destabilization we’re witnessing. It is what makes all our money effectively be worth nothing more than someone’s promise of debt, but you can watch more about that in an excellent documentary called Money as Debt (note though that I don’t agree with the solution the documentary suggests to the presented problem).

But the reason I’m writing this is an article which provides a fairly simple argument on why is Fractional Reserve Banking fradulent which effectively boils down to that no two persons can own the same thing or the same amount of money: “Fractional Reserve Banking Is Indeed Fraudulent”.

It’s a good article and I suggest reading it, but I have a couple of complaints which tie in to a recent discussion I’ve had on our IRC channel at #libervis ( about what constitutes property ownership.

Defining property ownership

The author, Laura Davidson, claims that property ownership is defined by the right to dispose of that which is owned. If you can’t dispose of the thing then you don’t really own it so it’s not your property. This is in a nutshell the definition my debater had on IRC as well, but as we discussed I finally reached the conclusion that while not entirely incorrect this definition is merely a subset of what property ownership implies, which is control. Being able to dispose of something is being able to exercise control, but few would deny that if you own something you can also use it in every which way you choose so long as it is possible with respect to the nature of the thing in question (as in, you can’t use a tricycle to travel through space at warp speeds).

This is also what allows ownership of ideas, but I will explain that in an upcoming article on Suffice it to say that there are two elements in question: control and nature and to understand property we have to understand both concepts. Control cannot be applied to a thing in ways in which its nature does not allow. So a human cannot control another human if that human does not let it because that human is a controller of himself as well.

But this is a minor complaint as “right to dispose” off is still a subset of control.

Collective ownership

Secondly, I vehemently disagree with the notion of “collective ownership” which she seems to accept. I think it’s an utter self-contradiction and it requires such explaining away like this:

In the case of joint ownership by a couple or a group, individuals within the group do not have full rights of ownership individually. (They cannot logically each have an independent right to use or dispose of the property whenever and however they please.) They can have partial rights individually, but they can only have full rights of ownership collectively. Therefore it is the group, as a single entity, that has full rights of ownership.

This is stating an impossibility. An individual has partial rights, but can at the same time have full rights collectively? I’m sorry, but I think you can’t have both at once. The “entity” is non-existent. By the definition of a group it is a number of individuals not a single entity. I’ve written more about collective ownership here.

All this, however, doesn’t change her core argument about the fraud inherent in fractional reserve banking. If you deposit money to a bank and get a contractual guarantee to withdrawal of the same amount on demand then you didn’t make a loan (then the only contractual guarantee you would have is to withdrawal after a certain period of time) and you therefore contractually kept control over your money to yourself – continuing being an owner. A bank can’t own that money at the same time as you so it lending any of it to someone else is FRAUD.

But that happens every day.

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