Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

20 Money, Bank Credit, and Economic Cyclesirregular deposit contract (which could be considered arequirement of the fungible nature of the deposited goods)does not imply a simultaneous transfer of availability of thetantundem, in the loan contract there is a complete transfer ofownership and availability of the tantundem from lender toborrower. 21 The differences covered in this section are outlinedin Table 1-1.4THE DISCOVERY BY ROMAN LEGAL EXPERTS OF THEGENERAL LEGAL PRINCIPLES GOVERNING THEMONETARY IRREGULAR-DEPOSIT CONTRACTTHE EMERGENCE OF TRADITIONAL LEGAL PRINCIPLESACCORDING TO MENGER, HAYEK, AND LEONIThe traditional, universal legal principles we dealt with inthe last section in relation to the irregular deposit contracthave not emerged in a vacuum, nor are they the result of a prioriknowledge. The concept of law as a series of rules andinstitutions to which people constantly, perpetually and customarilyadapt their behavior has been developed and refined21 At this point it is important to draw attention to the “time deposit”contract, which possesses the economic and legal characteristics of atrue loan, not those of a deposit. We must emphasize that this use of terminologyis misleading and conceals a true loan contract, in which presentgoods are exchanged for future goods, the availability of money istransferred for the duration of a fixed term and the client has the right toreceive the corresponding interest. This confusing terminology makes iteven more complicated and difficult for citizens to distinguish betweena true (demand) deposit and a loan contract (involving a term). Certaineconomic agents have repeatedly and selfishly employed these terms totake advantage of the existent confusion. The situation degenerates furtherwhen, as quite often occurs, banks offer time “deposits” (whichshould be true loans) that become de facto “demand” deposits, as thebanks provide the possibility of withdrawing the funds at any timewithout penalty.