Talking to the Man
A reader writes:
Thanks for all you do.
I recently relocated to my hometown area in the midwest (iowa/illionois border) and I work as a dotNet applications developer/programmer for a local community bank (about 1.8 billion in assets, 57million in gross profit, and 6.6 million in net income/year).
I take pride in what I do because on net, I do help the operations of our business be more productive and automate many mundane tasks.
I am well aware of the [insights] of Rothbard, Hayek, and Mises. I wish we could abolish legal tender, centrally controlled fiat paper money, and fraction reserve banking among other things even though my bank benefits from these things.
We have an upcoming lunch with the bank president and I would like to ask him some questions. Im a self-taught austrian via the mises institute/peter schiff/ron paul/tom woods/your blog persuasion. I don’t want to come off as an arrogant smarty pants with esoteric questions, but I do want our bank to be successful in the long run and serve the needs of our customers.
If you were in my shoes, what question(s) would you ask if you had an hour with a bank president?
Thanks for your thoughts.
P.s. maybe you could pose this to your readers and omit my last name. Thanks!
The only thing I would ask him, is if he could give me a line of credit. But that’s just me.
I’m curious why a person thinks he has the right to abolish fractional-reserve banking.
If the customer knows and accepts that his bank is FRBing than at what part of the exchange do you come in?
Don’t like FRBing? Then don’t be part of it but don’t think you can control the choices of others.
I see the same reaction from people when they hear of “gouging” after a disaster not realizing that it is a normal market process that people voluntarily engage in.
“Oh Hell no! We must stop those gougers! They are taking advantage of those poor folks!”
In any event, with a well-capitalized and well-run bank it’s not an issue. The counter-party risk is very low. Especially without government regulations or deposit insurance.
There’s probably a greater risk of a person being injured and the resultant costs while driving to the bank than there is his currency will decline in value over the same time period.
A dotnet programmer of a bank who talks about fiat paper money should just consider himself happy he’s not been fire yet.
Don’t bother discussing fractional reserve banking. That’s like discussing the ethics and economics of intellectual property with the CEO of a publishing company that currently has no choice but to operate in a world with IP laws.
On the other hand, you might ask about the extent to which macroeconomic forecasts influence business decisions, how the bank determines what interest rate to charge on loans, how the bank might be affected by recent and upcoming regulatory changes, etc.
Warren, I basically agree with your comments (even though it is a little off the subject of what was asked in this post). It actually astounds me how many of the top Austrian economists think that fractional reserve banking should be illegal.
I certainly don’t endorse it, but if a bank is open about its fractional reserve banking and there are willing customers, then who am I or anyone else to use force to stop voluntary parties from entering into a contract? Of course, this whole thing is predicated on the idea of free banking where there is no central bank, no FDIC, and no bailouts.