Live Debate in NYC 4/16: Does Fractional-Reserve Banking Undermine Free Markets?

Texas Tech's Robert Murphy squares off against Cato's George Selgin in New York on Monday, April 16.

Soho Forum

"Fractional reserve banking poses a threat to the stability of market economies."

That's the resolution that will be debated at the next Reason-Soho Forum debate, which takes place on Monday, April 16 at New York's Subculture Theater.

Co-founded and moderated by Gene Epstein, The Soho Forum is "a monthly debate series that features topics of special interest to libertarians, and the series aims to enhance social and professional ties within the NYC libertarian community."

Before the debate, libertarian comic Dave Smith will perform a set specially tailored to the evening's topic (good luck with this one, Dave!).

Reason is proud to partner with the Soho Forum, to livestream each debate as it happens, and to publish the debates both as videos and as episodes of the Reason Podcast; go here for our archive.

The Soho Forum is an Oxford-style debate, which means that the audience votes before and after the proceedings. The participant who moves the most people to his or her side is declared the winner. The event will be livestreamed at Reason.com and at Reason's Facebook page and online viewers will be able to vote.

For the affirmative:

Robert P. Murphy is Research Assistant Professor with the Free Market Institute at Texas Tech University. He has a PhD in economics from NYU. Murphy is also Senior Economist with the Institute for Energy Research (IER), Senior Fellow with the Mises Institute, Senior Fellow with the Fraser Institute, and Research Fellow with the Independent Institute. He has authored hundreds of articles and several books explaining economics to the layperson, including Choice: Cooperation, Enterprise, and Human Action.

For the negative:

George Selgin is a senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia. His research covers a broad range of topics within the field of monetary economics, including monetary history, macroeconomic theory, and the history of monetary thought. He is the author of The Theory of Free Banking; Bank Deregulation and Monetary Order; Less Than Zero: The Case for a Falling Price Level in a Growing Economy; and, most recently, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage.

Monday, April 16, 2018

Cash bar opens at 5:45pm
Event starts at 6:30pm
Subculture Theater
45 Bleecker St
NY, 10012

Tickets cost between $10 and $18 and must be purchased in advance.

Seating is limited, so buy tickets now.

To set a reminder at Facebook and watch a livestream of the debate on Monday, go here now.

The previous Reason/Soho Forum debate was about sexual assaults on college campuses and featured SUNY professor Michael S. Kimmel and Reason Contributing Editor Cathy Young. Go here for more details and click below to watch.

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Comments

[Rhywun]

This is so wonky I don't even know how to joke about it.

[Citizen X - #6]

Yo mama so wonky, she got invited to participate in a Soho Forum debate.

[Alan Vanneman]

"Fractional reserve banking poses a threat to the stability of market economies."

If there were a real free market, they'd be paying people $20 to attend.

[Old Mexican - Mostly Harmless]

That's where you're wrong. The market for wonky debates is so heavily *unregulated* it comes close to a free market where lim X tends to zero.

[Chipper Morning Baculum]

OOOH, this should be good!

[Colossal Douchebag]

Members of the financial community never cease to amaze me. As soon as the latest collapse has been narrowly averted, they break out their spelunking gear and go hunting for a way to cause the next one.

Fractional reserve banking, like democracy, is the worst system there is, except for all the other ones.

It poses a threat to the stability of market economies in much the same way that democracy poses a threat to basic human rights: while there are certainly ways in which it could be abused to pose a threat, there are damn sure countless of other ways in which it helps to safeguard and secure the desired institution.

[Palin's Buttplug]

Perfect reply,

[vek]

I don't think fractional reserve banking is a problem necessarily, I'm more not a fan of debt based fiat money... If we're gonna bitch about the major fundamentals of the world as it exists today.

[Chipper Morning Baculum]

I see Bob Murphy is not listing Chaos Theory in his blurb. Trying to be respectable, Bob?

[Citizen X - #6]

What is he, some kind of nanarchist?

[Just Say'n]

What do you mean by 'respectable'? What is risque about 'Chaos Theory'? Because he's responding to Hoppe?

[Chipper Morning Baculum]

I was just joking about the fact that anarchism is considered to not be within the confines of respectable debate.

[Just Say'n]

Mises people are going to be there. Did you clear this with the Kochs beforehand? Someone might mention people that have been un-personed

[Lurker Kurt]

Isn't Fractional Reserve Banking what banking is all about?

Also, isn't "Fractional Reserve Banking" another name for the Goldsmith's Principle? Which was discovered by, strangely enough, goldsmiths in the middle ages and thus been a part of free market economics for nearly a millennium?

[Old Mexican - Mostly Harmless]

Isn't Fractional Reserve Banking what banking is all about?

No.

[Old Mexican - Mostly Harmless]

Does Fractional-Reserve Banking Undermine Free Markets?

Yes.

Next question? You, in the funny hat.

[Old Mexican - Mostly Harmless]

Can you elaborate?

Yes. Fractional-Reserve Banking, if mandated or protected by government, undermines markets.

[Juice]

I don't think it's mandated. Surely it's protected through FDIC and such. But I think it's actually restricted by government, which requires certain minimum reserve ratios. If banks were allowed to choose their own reserve ratios, surely many of them would go nuts and keep very little reserves, then there would either be more bank runs and failures and/or surviving banks would be much more careful with that sort of thing on their own.

[Brandybuck]

I hope George pummels Bob into submission. Of all the things that have held libertarianism back over the decades, the irrational belief that voluntary transactions between a depositor and a lender are immoral and evil have to rank up near the top. Shit, it's like some AnCaps would abolish all government, except for the banking police who are needed to round up bankers to be execution if they offer interest bearing checking accounts.

That the government operates fractional reserve banking via the Federal Reserve quango is wrong. But this does not mean that private actors can't freely choose to lend on fractional reserves. If you don't like it, don't do business at that bank. Period. It's none of your fucking business to dictate to me what kinds of relationships I can or cannot enter into with my banker.

[Old Mexican - Mostly Harmless]

Re: Brandybuck,

the irrational belief that voluntary transactions between a depositor and a lender are immoral and evil have to rank up near the top.

Did you have trouble dressing up that strawman, B? Perhaps you need mote straw...

But this does not mean that private actors can't freely choose to lend on fractional reserves.

You miss the point completely. The problem is not the transaction but the lack of transparency. Or does your bank tell you that you risk losing your money every time you open a GAWDDAMNED savings account, save for whatever the government says will insure?