to jp:
i think semantics are extremely important in business, so as people are not deceived as to what the real nature of the product is.

“banc” sounds like “bank”, why don’t you call your company “corp”? maybe you’re sneakily trying to get people to believe their money is safe, as rightfully most people believe when they “deposit”, or entrust their current account money for safe-keeping. call your bits of paper “fr notes”, and your company “corp” or “scheme” or whatever, but not “bank” “banc” or other homonym. (contracts can be verbal, too, so sounds count).

i don’t have to vet my wheat purchases to see whether i’ve been sold “weet” (something else whose ingredients may or may not include what i thought i was buying). in the same way, “deposit” has a clear meaning that should not be twisted. same goes for “loan”, and “gift” etc.

likewise, if i walk into a doctor’s surgery, i expect not to be checked out by a vet, or by a doctor of letters.

in all probability, were there no regulatory regime for deposit-taking banks, “bancs” would face legal action from banks, who would be alarmed at this sleight of hand.

Brian Macker:
“Read the very short book linked to with the url of my name on this comment to see what happened to France when they tried to back their currency with real estate stolen from the Catholic Church. It didn’t end well.”

The episode went exactly as the real bills doctrine said it would. When the assignats were adequately backed (by the land, etc) they held their value. When the land had been sold off, and the National Assembly kept issuing floods of paper currency without getting adequate backing in exchange, the assignats lost value.

The RBD says that the value of money is equal to the value of the assets backing it. If a 10% increase in money is matched by a 10% increase in the assets of the issuing institution, there will be no inflation. If money outruns assets, there will be inflation.

Stanley Pinchak:
“Mike Sproul is a proponent of real bills which if I understand correctly are limited to short term paper, but I fear that even short term paper can be backed by assets who’s value may fall”

The RBD has been around for centuries, and has been stated in many different ways. The version I advocate says that the value of money is equal to the value of the assets backing it. Short or long term is irrelevant. Only value matters, and of course is those assets lose value, the money will too, just like any other financial security.

Newson:

“”Picture a call option on IBM stock with no expiration date and a strike of zero.”

doesn’t make sense. what you’ve got is the fully-paid share. no expiration date makes the option valuation impossible. ”

No expiration date makes valuation trivial. A call on IBM with a zero strike and no expiration date will always be worth exactly the same as one share of IBM, just as a checking account dollar is always worth one green paper dollar.

jp: “Sorry but I’d never take your FRB notes. The Bank of Carlos Novais has no reputation, history, or expertise in the matter. As I said, I’d only accept the notes of reputable and large banks with conservative lending practices and a well diversified deposit base.”

That do not explanain why a FRB would be able to issue notes with a contract taht have an implicit credit risk plus the uncertainty of how much more the fractional ratio will be (even if hte contract is clear and says a minimum of 20%)…

… and those notes will be accepted at its face value agains a 100% reserve bank.

Seems to be that i would personally sell short every FRB receipts (i would take a line of credit ) at its face value against jp (jp would buy it, or se he says…) and buy 100% FRB notes.

… i would personally sell short every FRB receipts (i would take a line of credit at a FRB established in the market ) at its face value against jp (jp would buy it, or so he says…) and buy 100% RB notes (jp would sell it).