"...we can easily see another fraudulent practice that HHB should object to equally strenuously: fractional reserve gift certificating.
Look at the deceit involved in this nefarious practice: a local
restaurant at Christmas time sells gift certificates for 1000 prime rib
dinners, and yet... there are not 1000 prime rib dinners in the
restaurant at the moment they sell them! In fact, never are there more
than fifty or so in the restaurant at any one time. The crooked owners
of this restaurant, of course, will try to hide their deceit behind some
spurious claim like, "Based on past gift certificate programs, we
expect redemptions of about 100 meals per week, and we have plenty of
beef on hand to meet that demand.""
It's a great response to an argument that seems like it is increasingly grasping at straws.
The "you can't have two people own the same thing" argument that Gene is responding to is actually pretty creative and clever (not quite clever enough, but clever). But it's a little roundabout, precisely because the naive arguments against fractional reserve banking are so bad. You would think that the obvious response to a claim of fraud is whether people understand what's going on or not. If they know what's going on, it's hard to claim that they've been defrauded. Fraud implies that someone has had the wool pulled over their eyes.
So do people know what's going on? Of course they do. Ask an elementary schooler if the bank has everyone's money locked up away in the vault and they might be confused and think it is. But you can't circulate in modern society very long without having some inkling of the operation of fractional reserve banking.
If you're aware of the practice, how can you be said to have been defrauded? You can't! People are implicitly but knowingly told that the bank will hold their money but that if everyone comes at once the bank may not have all that money on hand. We tell that story in children's stories and Christmas stories like Mary Poppins and It's a Wonderful Life, after all! You can take that deal or you can leave it - and if you're a real stick in the mud you can google what that FDIC sticker on the bank window is all about - but people are aware of the nature of the deal. If you're aware of it, it's not fraud.
Of course, if it's not fraud by this very obvious standard for "fraud", Rothbard and the rest of them start to look a little sillier (if that's possible). Hence, the resort to more creative arguments like "two people can't own the same thing".