What is the Latin for ‘Mayonnaise’? A Response to Bagus, Howden and Gabriel

Throughout this article I will use the term “demand deposit” to refer to fractionally reserve demand deposits.

See Merriam-Webster dictionary, http://​www.​merriam-webster.​com/​dictionary Date accessed April 7, 14.

See Merriam-Webster dictionary, http://​www.​merriam-webster.​com/​dictionary Date accessed April 7, 14.

Indeed elsewhere in their article they use examples of leaving a Rembrandt painting or an engagement ring in a safety deposit box and them being appropriated by the bank (p. 3). The notion that this is “almost completely analogous to the conditions of modern deposit banking” (p. 3) is somewhat of a stretch. Ironically, BHG accuse Evans of not being aware of the distinction between regular and irregular deposits, pointing out that “most monetary deposits are irregular even though regular money deposits such as coins in sealed bags also exist” (p. 2). They go on to cite Heurta de Soto (2009, p. 6). In fact, their example was used by Evans, “coins can be kept in sealed bags” (p. 6) who also provided a citation to the exact same Heurta de Soto book (p. 5).

As an anonymous reviewer has pointed out, for individual players their racket need to be perfectly substitutable in case one of them breaks during a match!.

The example is, “When I leave my car with an airport valet for 2 weeks it is precisely because I don’t want to use it for a certain period of time” (Evans 2013).

They say, “As in such constructs with a withdrawal clause, the depositor does not want to transfer availability and to him it functions as a demand deposit contract the same legal principles apply; to wit, the depositary’s obligation to keep a 100-percent cash reserve”. (BHG 2014). In other words, they say that a time deposit with a withdrawal clause, that operates as a demand deposit, suffers from the same illegitimacy as an actual demand deposit. But this de facto/de journo distinction isn’t clear cut.

Perhaps this is why they completely ignored the empirical evidence that Evans (2013) draws upon to show that (i) some customers understand that banks keep fractional reserves; and (ii) banks don’t pretend that they do.