Re: A Bank Levy in Cyprus, and Why Not to Worry
Dear Sirs:
Is there any coercive and illegal act by a government anywhere that Andrew Ross Sorkin will not either endorse or rationalize away into the corn field? Apparently the outright attempted theft by the EU and IMF of Cypriot bank customers is just fine with him. He reminds me of the old Mad Magazine byline: What, Me Worry? When will the great New York Times start examining the real lessons of the euro debt crisis, whose latest victims are the Cypriot bank depositors? It should be apparent that there IS a limit to how much phony money central banks can print in order to cover up the wealth destroying effects of fractional reserve banking. Ah, yes, we may all actually have to learn something, even New York Times columnists, about the real nature of banking as a depository of current account funds, for which the bank must maintain one hundred percent reserves, and as a fiduciary intermediary, in which the saver lends his money to the banker for the banker’s further lending to his borrowing customers at interest. The former banking service is completely sound as long as the banker abides by normal commercial law and is prepared to meet his depositors’ obligations at any time, even if they all descend upon the bank at once. The latter banking service cannot be guaranteed beyond the banker’s capital fund and his reputation for sound lending practices. So-called deposit insurance is no insurance at all, but merely a promise by the central bank to print as much money as necessary when the banker cannot meet his legal obligations himself. Fractional reserve banking has violated sound financial and economic laws, which has led to greater and greater crises. Finally the Germans have said enough, which has revealed the true rot not only in Europe but all over the world, for banking systems everywhere have adopted this fallacious fractional reserve model. Patrick Barron
