Thursday, September 29, 2011
The blogger known as 'Lord Keynes' appears to have caught the Rothbardians in a logical contradiction. From the post "If Fractional Reserve Banking is Fraudulent, Why isn't the Insurance Industry Fraud": "First, virtually all business investment and insurance industries could be regarded as inherently instable, like FRB, because the future is uncertain. But the insurance industry – just like FRB – can be operated profitably over long periods and is stable. When some unforeseen event happens like a massive natural disaster, the insurance companies could be overwhelmed by claims and collapse, because they cannot pay. If all or a very large number of the policy-holders of an insurance company suddenly needed insurance payments over a brief period, the company might not be able to honour all its claims or find a credit line to allow it to do so. But that is not an even remotely serious argument against insurance, because all business activity involves risk and uncertainty, and both clients of a business and the business itself can never escape uncertainty and the possibility that the business’s contracts might not be honoured."