Demand Deposits (9) - Fatal Flaw

Money is a fungible good, but the argument that the bank owns it still has a fatal flaw. The defenders of money argue that when a fungible food is put into a silo or tank, the ownership of the good passes to the owner of the storage. They say that the same applies to demand deposits at the bank. Because money is a fungible good, ownership passes to the bank. This logic is not correct.

When oil is put in a silo or oil into a tank, the ownership should not pass to the owner unless he buys it from the people putting it in. If I put wheat in a silo along with wheat that belongs to eight other people, I still own some wheat. The difference is that whereas, I previously owned my own wheat, I have now own a share of silo of wheat. The wheat in the silo does not belong to the owner of the silo. It is owned jointly by me and the eight other people who have put their wheat into the silo. The owner of the silo is not entitled to take some of the wheat for his only use, even if he put some other wheat back, before the owners demand it back.

Likewise, when several people put their oil into the same tank, the ownership of the oil does not transfer to the owner of the tank. Rather they have swapped ownership of a specific volume of oil for a share in a larger volume of oil. The owner of the tank can only claim ownership of oil if he has actually purchased some oil. He has no right to take the oil for his own use, even if he puts some oil volume back into the tank later. The owner of the tank or the silo has a duty of care to those who are paying a fee for the storage. That does not give him a right use what is being stored.