Abstract

Barnett and Block establish that not only are fractional reserve demand deposits fraudulent and create an Austrian Business Cycle , but that a certain type of mismatching between time deposits and the period for which the depository institution relends the deposited funds are also contrary to libertarian law. The question we address in the present paper is whether or not this type of disconnect between the period for which the ultimate lender committed funds and the ultimate borrower gained possession thereof also necessarily start an Austrian Business Cycle. Even though this does not constitute an increase in the stock of money, we answer in the affirmative