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Page 27 ….
Page 27 …. The bank CREATES NEW MONEY OUT OF THIN AIR, and does not, like everyone else, have to acquire money by producing and selling its services. IN SHORT, THE BANK IS ALREADY AND AT ALL TIMES BANKRUPT; but its bankruptcy is only revealed when
customers get suspicious and precipitate "bank runs." No other business experiences a phenomenon like a "run." No [49] other business can be plunged into bankruptcy overnight simply because its customers decide to repossess their own property.
No other business creates fictitious new money, which will evaporate when truly gauged.But the bank does promise to redeem on demand, and so when it issues any fake receipts, it is already committing fraud, since it immediately becomes impossible for the bank to keep its pledge and redeem all of its notes and deposits. [15]
Fraud, therefore, is immediately being committed when the act of issuing pseudo-receipts takes place. Which particular receipts are fraudulent can only be discovered after a run on the bank has occurred (since all the receipts look alike), and the late¦coming claimants are left high and dry.
[15]See Amasa Walker, The Science of Wealth, 3rd Ed.(Boston: Little, Brown, and Co., 1867) pp. 139-41;
and pp. 126-232 for an excellent discussion of the problems of a fractional-reserve money.
**Fraud is implicit theft, since it means that a contract has not been completed after the value has been received. In short, if A sells B a box labeled "corn flakes" and it turns out to be straw upon opening, A's
fraud is really theft of B's property. Similarly, the issue of warehouse receipts for non-existent goods,
identical with genuine receipts, is fraud upon those who possess claims to non-existent property.
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