Prof. Lawrence H. White responds to Jesus Huerta de Soto on Banking (part 3)

Following parts 1 and 2:
Prof. Lawrence H. White responds to Jesus Huerta de Soto on Banking
Prof. Lawrence H. White responds to Jesus Huerta de Soto on Banking (part 2)


and thanks again to Prof. Steven Horwitz who emailed me the series of responses to Jesus Huerta de Soto's major work against fractional reserve banking, I am pleased to re-publish part 3 of 3. The original site these are supposed to be found on does not seem to be up anymore.

Keynes and Hayek, rap version, amusing

Costs of the Gold Standard

Economists are often tempted to dismiss or criticise the gold coin standard because of the social costs of mining, minting, wear, and interest foregone. This post discusses these costs, and how they would be handled by market participants in a free market and evaluates their size under free banking.

(picture: a British Sovereign gold coin, depicting St George slaying the dragon, with 7.32235 grams of pure gold.)

How Faltering Financial Institutions can Raise Cash

You are running a bank, and the news is all bad. Your loans are going bad and your depositors are voting against you with their funds, while rumours swirl around the financial markets about your bank's problems. How can you meet this torrent of cash outflows? Wholesale investors stopped buying your unsecured paper in all maturities weeks ago, almost all your assets are very difficult to sell, and those that are easy to sell are fast running out: is there some other way to avoid running out of cash for a little longer?

Banking Without Regulation - 3 Lessons from History

 This one is an FEE Timely Classic, thanks to Lawrence H White, highlighting the successful history of free banking on metallic standards.

Banking Without Regulation

By Lawrence H. White • October 1993 • Volume: 43 • Issue: 10

Dr. White, Associate Professor of Economics at the University of Georgia, is a Contributing Editor of The Freeman.
How well would the banking system work if there were no government regulation? One way to begin answering this question is to examine the historical record. In the nineteenth century many countries had relatively unregulated banking systems with few or none of the restrictions that face American banks today: legal barriers to new entry, deposit insurance, geographic and activity restrictions, reserve requirements, and protection of favored banks from failure. Because these systems were so different from today’s, they throw valuable light on the possible consequences of completely deregulating banking in the future.
A useful source of historical information is the recently published volume entitled The Experience of Free Banking, edited by Kevin Dowd (London: Routledge, 1992). The book’s contributors (of which I am one) investigate relatively unregulated banking systems in nine different countries during the nineteenth century: Australia, Canada, Colombia, China, France, Ireland, Scotland, Switzerland, and the United States. An overview chapter by Kurt Schuler shows that there were another fifty episodes that might also be investigated in detail. Fresh historical evidence, of the sort provided in this book, usefully complements the several other studies of free-market money and banking that have been published in recent years.[1]

Investors Rate South Canterbury Finance

A few weeks after South Canterbury Finance's BB+ rating was affirmed and a few days after it announced a $27m capital injection  perhaps it is a good time to see how investors have responded.

Let's start by looking at some low risk investments, for comparison:

Even More evidence NZ Big Banks had Ample Funding During the Crisis

As per November's post:

More evidence NZ Big Banks had Ample Funding During the Crisis

Kicking the can down the road

Today's news article Uncertainty over listings confirms that South Canterbury Finance and Southbury have no strategy in place for recapitalising South Canterbury Finance.

Baby Steps for South Canterbury Finance and Southbury

How much help is $27m in new capital for South Canterbury Finance? For a troubled company with assets of around $2b it can't be described as anything but a band aid, keeping the show on the road for another few months.

Prof. Lawrence H. White responds to Jesus Huerta de Soto on Banking (part 2)

Following part 1:

Prof. Lawrence H. White responds to Jesus Huerta de Soto on Banking

and thanks again to Prof. Steven Horwitz who emailed me the series of responses to Jesus Huerta de Soto's major work against fractional reserve banking, I am pleased to re-publish part 2 of 3. The original site these are supposed to be found on does not seem to be up anymore.

Police: "Give me your name and address or else!"

Have you ever resented being asked to give your name and address in order to do a breath test at a road alcohol check point? Have you ever wondered why they need your name and address to check your breath?

Lost Soul started the New Year with an unplanned test of his civil rights, the Privacy Act, and Police Powers by defying such an unnecessary request. I don't recommend you try this, especially if you are one of my American visitors!