Here is my feedback:
Insolvency is a very general word. I would suggest to either define it instrumentally (= saying "for this article I will assume that the word insolvency means ...") or always use more specific terms like "accounting insolvency" and "technical insolvency". See
http://en.wikipedia.org/wiki/Insolvency It is in this situation that we consider the bank to have fractional reserves.
Isn't it that fractional reserves equal liabilities > assets? It at least sounds intuitive to me. But you said "It is in this situation" and the situation you described in the sentence before involves another condition besides the "liabilities > assets" condition.
The bank will only be able to continue operation provided new depositors come in at a rate faster than withdraw requests, the classic characteristic of a Ponzi Scheme.
I would make extra clear here that this depends on BOTH conditions (liabilities > assets AND income < expenses). A reader that is convinced of the banking system would tend to oversee the necessary AND condition and then get the impression that you are wrong.
If the new creditors were not aware of the financial condition of the company then that constitutes fraud.
This is at least inconsistent with how the word "fraud" is used: "Fraud is a deception deliberately practiced in order to secure unfair or unlawful gain". (
http://en.wikipedia.org/wiki/Fraud)
How could we know the intentions of the bankers and how can we generalize their intention?
In fact, I would argue that the easiest way to discover whether or not a system is a Ponzi Scheme is if all obligations can be met immediately when they are due.
Is "immediately" and "due" a contradiction here?
I would say that it is not true that "liabilities > assets" equals ponzi scheme. For it to be a "system determined to fail" it would in addition require that either expenses > income (net / over time) or that the system gives out "payable on demand IOUs". You described that above but reduced it here to just the "liabilities > assets" criterium. Here is an example: A company is also a system (if you don't agree I would suggest to define "system" more clearly) and it is not determined to fail just because its liabilities are greater than its assets.
In other words, is the system solvent.
...needs a "?" behind "solvent".
and a Ponzi Scheme is clearly fraud
fraud requires bad intent... Having the conclusion in mind that the banking system is determined to fail should not lead to using words like they normally are not used.
We all know how the warehouse receipt game goes. Moving the debt instrument accounting from the internal database of the bank to a public transaction ledger does not change the risk or prevent the fraud that the banking system has been unable to prevent for hundreds of years.
This one I probably just don't understand: Since we are talking about warehouse receipts (like Bitreserve etc.), how is it possible to show their actual USD/gold/whatever deposits on a blockchain or is this not what you are saying here?
There is another approach that technically avoids creating a Ponzi Scheme.
...added an "a".
The price information that is used to trigger these margin calls is provided by over 50 independent sources elected by the shareholders which are implicitly trusted to be fair judges of the price.
Wouldn't it be worth adding here that the median is making up the price feed? Otherwise "judges of the price" sounds more susceptible to collusion than it is.
It involves selling a crypto currency that you are not legally required to buy back at any price, but which you have established a proven history of doing so.
Shouldn't this say "buy back at a target price (for example 1 USD) per crypto currency unit at any time" also since in the next sentence you assume that the reader understands this mechanism?
My overall impression: Whether those articles (on general political, financial or economic issues) are a success with a wider audience, we will hopefully have later, hugely depends on whether it can be avoided that they are put in the same category of badly researched articles and videos that are just hating on the banking system and everything mainstream without making a concise argument. I think your article does make a concise argument and it nicely applies the arguments to crypto currencies. But there is the danger that many readers put it in the same category as described above because it suits their preexisting world view and the missing precision in many parts makes it easy for them to justify their perception of the article. This is especially true if it is regarded as more valuable to convince the unconvinced than confirm the world views of those that are critical of the banking system.
Even more general: Precision + implicitly making clear that one is aware of norms (in this context the norm to use words like they are normally used) + conveying friendliness / goodwill + no over complication, makes it very hard to ignore an argument.