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Showing posts with label Fractional Reserve Banking. Show all posts
Showing posts with label Fractional Reserve Banking. Show all posts

Saturday, July 13, 2013

Financial Independence and Intellectual Influence

 If you are interested in the history of ideas, at some point this question will occur to you: "How is it possible for someone to gain influence, yet at the same time retain his independence?" If you traffic in ideas, you have to be able to do both. 

A crackpot can go online today and argue for his favorite theory. He is completely independent. He is also completely ignored. His independence does him no good, because what he writes has no influence.
I suppose my two favorite recent examples of people who have maintained their independence, but whose ideas have had considerable influence, are Ludwig von Mises and Murray Rothbard. They are more influential today than they were at the time of their deaths. Mises died in 1973. Rothbard died in 1995.
Mises had the great advantage in the final phase of his intellectual career in the fact that Yale University Press published his books from 1944 to 1957. This gave him an audience.

Sunday, June 30, 2013

What’s So Scary About Deflation?

 by Frank Hollenbeck

When it comes to deflation, mainstream economics becomes not the science of common sense, but the science of nonsense. Most economists today are quick to say, “a little inflation is a good thing,” and they fear deflation. Of course, in their personal lives, these same economists hunt the newspapers for the latest sales.

The person who epitomizes this fear of deflation best is Ben Bernanke, chairman of the Federal Reserve. His interpretation of the Great Depression has greatly biased his view against deflation.

Mises' Answer to Would-Be Conspirators: You Will Lose

by Gary North

Over half a century ago, Ludwig von Mises made a crucial observation.
The capitalistic social order, therefore, is an economic democracy in the strictest sense of the word. In the last analysis, all decisions are dependent on the will of the people as consumers. Thus, whenever there is a conflict between the consumers' views and those of the business managers, market pressures assure that the views of the consumers win out eventually.
I have long believed he was correct. Like Mises' disciple Murray Rothbard, I am a student of conspiracies. They all have this in common: the seek leverage through the state. They instinctively know that Mises was correct, that they are the servants of customers in a free market order. So, they seek to rig the markets by means of the state.
Once a person comes to grips with Mises' observation, conspiracies appear less formidable. The state is a weak reed when compared to the long-run effects of liberty. The free market prospers under liberty. It expands its control over production and distribution.
This leads me to the topic at hand.

Friday, March 29, 2013

Want To Understand Money?


This was published on January 2, 2013, in Ron Paul’s Monetary Policy Anthology: Materials From the Chairmanship of the Subcommittee on Domestic Monetary Policy and Technology, US House of Representatives, 112th Congress.
The scholarly contributions of Murray N. Rothbard span numerous disciplines, and may be found in dozens of books and thousands of articles. But even if we confine ourselves to the topic of money, the subject of this volume, we still find his contributions copious and significant.
As an American monetary historian Rothbard traced the party politics, the pressure groups, and the academic apologists behind the various national banking schemes throughout American history. As a popularizer of monetary theory and history he showed the public what government was really up to as it took greater and greater control over money. As a business cycle expert he wrote scholarly books on the Panic of 1819 and the Great Depression, finding the roots of both in artificial credit expansion. And while the locus classicus of monetary theory in the tradition of the Austrian School is Ludwig von Mises’ 1912 work The Theory of Money and Credit, the most thorough shorter overview of Austrian monetary theory is surely chapter 10 of Rothbard’s treatise Man, Economy and State.

Friday, February 22, 2013

The continued wealth divide

By David Howden

Luxury carmaker Rolls-Royce’s 2012 financial results must have brought new worries to those concerned with the growing wealth divide.

Rolls-Royce reported a third consecutive annual sales record, the best results in its 108-year history. Priced at £170,000 for its cheapest model, it is safe to say that these sales were reserved for a small subsection of the wealthiest, perhaps the 0.01 percent. While the ongoing recession has left the masses paying off their debts and enjoying less consumption than before, the so-called one percent continue reaching for new heights and excesses.

What explains this growing divide, especially concentrated in the hands of a very few?

Tuesday, January 22, 2013

Why Is There a Euro Crisis?

by Philipp Bagus

Today's banks are not free-market institutions. They live in a symbiosis with governments that they are financing. The banks' survival depends on privileges and government interventions. Such an intervention explains the unusual stock gains. On Wednesday night, an EU summit had limited the losses that European banks will take for financing the irresponsible Greek government to 50 percent. Moreover, the summit showed that the European political elite is willing to keep the game going and continue to bail out the government of Greece and other peripheral countries. Everyone who receives money from the Greek government benefits from the bailout: Greek public employees, pensioners, unemployed, subsidized sectors, Greek banks — but also French and German banks.

Wednesday, January 16, 2013

Fractional Reserve Banking: The Source of All Evil?

by Paul Tustain - Bullion Vault

I'm getting very suspicious of anything which regulators think is "safe" collateral...

Fractional Reserve Banking is not responsible for the bad practice of 'creating money', writes Paul Tustain, founder and CEO of BullionVault.

It is a speed limit on money creation, put in place by a Central Bank to stop banks doing too much of what comes naturally to them.

The Central Bank used to leave lending decisions to bankers, and step in to liquidate them when they screwed up. But in a world of Deposit Protection Insurance and bank bailouts, the Central Bank picks up the tab for excessive money creation. To limit the risk, they impose the 'Fractional Reserve' to try to calm the commercial banks down. But it is only necessary because we have a timid central bank which lacks the gumption to swing its axe in the direction of bad banks.