Cite for how this is illegal with Grain? I can go down to the chicago futures market, and buy a contract to purchase grain a year from now from someone who doesn’t have any grain now, and doesn’t farm grain.
But even assuming that that’s true, If his argument is just “it’s illegal”–and he defines illegality based on what the government says to be illegal, it’s patently silly. Observe:
(1) DDAs are illegal.
—Why?
(2) Because this kind of contract is defined as illegal in other contexts.
—Who says it’s illegal?
(3) the government
—But doesn’t the government also say that fractional reserves are legal in the context of banks?
(4) Yes, but we shouldn’t listen to what the government says is illegal HERE–instead, let’s look to what the government says is illegal ELSEWHERE, in order to overrule what the government itself is saying HERE
If the justification for rejecting fractional-reserves is that the government says it is illegal in other contexts, how do you get around the response of “yes, that’s true–but the government says it is legal in this context–and you’re pointing to them to define what is and isn’t illegal”
I thought Rothbard’s argument was that the transactions were fraudulent (which also isn’t true, and is argued by many using the incorrect explanation of fractional-reserve banking that Expano Mapcase has presented–what he proposes is fraud–it just doesn’t have anything to do with fractional reserves.).