Comment: You should be more ashamed

You should be more ashamed you've been on here 4 years and can't distinguish between fraud and a bad deal. You're the one consistently wrong, but that doesn't have to be on purpose. It could also be due to ignorance.

Rothbard - Hence, under free competition, and without government support and enforcement, there will only be limited scope for fractional-reserve counterfeiting. Banks could form cartels to prop each other up, but generally cartels on the market don't work well without government enforcement, without the government cracking down on competitors who insist on busting the cartel, in this case, forcing competing banks to pay up.

Read more on the lewrockwell.com.

Rothbard sees it as being unnecessary for any government intervention. Hence FRB shouldnt be illegal. He simply believes it will collapse on itself and that it is a bad deal.

Now take this extensive argument of the compatibility of libertarianism and FRB between Caplan and Block. http://www.lewrockwell.com/block/block110.html

The crux or libertarianism they agree is that there cannot be a conflict of rights. Two people cannot have FULL rights to the same property. Block argues that FRB is as such.

FRB, when honest and contractual, leads to multiple claims on the same property. But, as in the marriage analogy, the multiple people do not ever have FULL rights to the same property, they all share less than full rights. When you make a deposit, or loan, you are essentially making an exchange which includes an exchange of rights, designated by contract. If this is honest and open, contract rights apply, including the events of bankruptcy.

http://www.lewrockwell.com/block/block111.html

Professor Posner - "If you asked the bank whether it might lend out your money, it would most certainly tell you that it would. So it is not lying to you, and there can't be fraud. Nor is there any other contradiction, incompatibility, or problem with the arrangement. Depositors take a risk that the bank will breach the contract but anyone who enters a contract takes the same risk."

As to counterfeiting, imagine free market money, where the most popular item du jour (gold, silver whatever) are used as money and deposited in banks. You may deposit any of these to an FRB bank, in full knowledge of the process, and the bank might issue you a note or redemption. The bank, in a free market, may become very popular. The gas station might accept them directly as payment on their own personal judgement of the bank's credibility. He may never even redeem them directly. The bank's note in the free market is a personal trade mark. They are free to make as many as they wish in accordance with the contract. When the gas station makes the personal choice to accept the note, they should understand that the note you were given as a non-full right to a given amount of property is in no way changed now that the gas station owner has the note. It is up to his discretion in accepting it.

In a free market, there is even no coercion. There are other banks who have notes who may keep full reserves. The gas station attendant is free to accept their notes and not the FRB notes.

In any case, there is no alchemy. There is no breach of contract. There is no fraud. There is only a game of willing participants.