Wednesday, 18 October 2017

Free Banking

Knowledge Problem in Central Banking – Part II

August 3, 2017
in Blog

The previous post presented Hayek’s knowledge problem in the context of the economic calculation debate under socialism. We discussed the distinction (sometimes overlooked) between information and knowledge . To sum up, information is objective data such as quantities and prices. As a qualitative concept, information can be complete or incomplete. Knowledge is subjective data interpretation. As a qualitative concept, […]

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“Roads to Sound Money” Book Release

Posted by Gonzalo Schwarz
November 11, 2012
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The Sound Money Project of the Atlas Network is proud to announce the release of its newest publication, Roads to Sound Money. Please join the Atlas Network for the launch on Wednesday, November 14 at 5 pm in the South American room at the Capital Hilton in Washington DC (16th and K Street). The event […]

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Roads to Sound Money

RoadsToSoundMoney-FINAL-IIThe Sound Money Project of the Atlas Economic Research Foundation is proud to announce the release of its newest publication, Roads to Sound Money. The project is a compilation of essays featuring some of the most visionary, yet practical thinkers on monetary policy from Atlas’s network. The essays range from reforming the fed, reinstating a gold standard as well as alternative monetary systems. The book was first presented to attendees of Atlas’ Liberty Forum in New York on October 3-4. Authors Jerry Jordan and Sean Fieler participated on a panel on the book during the event and presented their views on the matter. We now invite you to learn more about the book and discover the reforms that these authors suggest would put us on the path of sound money.

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‘Has the Fed Been a Failure?’

Posted by Gonzalo Schwarz
September 25, 2012
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by Gerald P. O’Driscoll That is the provocative title of the lead paper in the prestigious economics publication, the Journal of Macroeconomics. It is authored by George Selgin, William D. Lastrapes, and Lawrence H. White. (Selgin and White are professors, Cato scholars, and many-time participants in the annual Cato monetary conference). The journal’s editor considered […]

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It Ain’t So, Joe

Posted by Gonzalo Schwarz
June 26, 2012
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by Kurt Schuler Commenting on the appearance of the 100th issue of the Journal of Economic Perspectives, its founding editor, Joseph Stiglitz,remarks (page 22) that a diversity of perspectives is “especially important in a field known for having certain orthodoxies—orthodoxies that dominate for a while and then fade, making the profession sometimes look less like a science than it would […]

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Penny Lame

Posted by Gonzalo Schwarz
April 20, 2012
in Blog

The government wants every last cent you’ve got. by George Selgin As Congress prepares once again to decide the fate of the penny, with deliberations to take place next week concerning whether to revive the WWII-era practice of striking pennies of steel, so as to at least avoid wasting more than a penny’s worth of […]

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Robust Convertibility

Posted by Gonzalo Schwarz
April 8, 2012
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Not as exciting as Robot Convertibles, but much more important. by George Selgin What determines the extent to which a bank can be trusted to honor its fixed-rate redemption commitments? The answer that’s at least implicit on most writings is that what matters is the nature of the assets backing a bank’s IOUs, and especially the […]

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Let’s Give the Fed Some Competition

Posted by Gonzalo Schwarz
April 6, 2012
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The Federal Reserve prints so much money that since it opened its doors in 1914, the dollar has lost more than 90 percent of its value. by John Stossel Pssst. Want to buy some Stossels? They’re my own currency with my face on them. Why should you trust them? Because I promise to redeem them for […]

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Digging Up and Digging Down Gold

March 30, 2012
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The Gold Standard is the worst standard, except for all the others. In a recent post at Nada es Gratis (Nothing is Free), Jesús Fernández-Villaverde discusses a visit to the vault where gold is stored at the New York Fed. The post and subsequent comments evolve into some criticisms of the gold standard. I won’t […]

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Monetary Equilibrium and Relative Prices

February 13, 2012
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There’s long been debate on the role of an elastic money supply in achieving monetary equilibrium in a free market. Namely, should the money supply follow a 100-percent reserve requirement on banks or should banks be allowed to make use of fractional reserves. The debate offers two lines of reasoning. An ethical argument in favor […]

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Questions About a Free Banking Gold Standard

Posted by Gonzalo Schwarz
January 9, 2012
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Discussion about the gold standard often has advocates and critics talking past one another. One of the reasons is that there are members of both groups who do not know or, during the heat of argument, do not acknowledge that there have been many varieties of the gold standard. A free banking gold standard differs […]

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Hyperinflation, Alive and Well

Posted by Gonzalo Schwarz
January 4, 2012
in Blog

by Vern McKinley January 1st, 2012 11:19 pm In my initial post last May I mentioned I would discuss some of the economic environments that I have worked in as part of my consulting work. I have some very clear memories about inflation in the US from the late 1970s and early 1980s. I worked in a grocery […]

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Free Banking versus Large-scale Credit Expansion

Posted by Gonzalo Schwarz
December 28, 2011
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Observations on the Discussions Concerning Free Banking The Banking School taught that an overissuance of banknotes is impossible if the bank limits its business to the granting of short-term loans. When the loan is paid back at maturity, the banknotes return to the bank and thus disappear from the market. However, this happens only if […]

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Three Comments on the Gold Standard

December 12, 2011
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The financial crisis in 2008, the uncertainty about the future of the Euro and the doubts on the efficiency of monetary policy has brought some renewed interest in the gold standard as an alternative monetary system; or, at least, as a benchmark to evaluate if central banks did actually performed better or worse. This interest, […]

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The First International Financial Crisis: Free Banking Failure or Regulatory Failure?

December 2, 2011
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The Baring Crisis of 1890 is pointed out as the first modern international emerging financial crisis. The collapse of the banking system in Argentina came very close to triggering a financial crisis in London, the major international financial center. Banks in the United Kingdom were highly exposed to Argentinean debt, especially the Baring Brothers & […]

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Nonsense about NGDP Targeting

Posted by Gonzalo Schwarz
December 2, 2011
in Blog

by George Selgin December 1st, 2011 I meant to do so weeks ago, but I only just got around to reading the little flurry of posts concerning NGDP targeting that was set off by John Taylor’s critical remarks on the topic. And now, despite the delay, I can’t resist putting-in my own two cents, because it seems to […]

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Gold-bashing for Dummies

Posted by Gonzalo Schwarz
November 22, 2011
in Blog

Dr. George Selgin has a hilarious post over with our friends at FreeBanking.org where he eviscerates a NYT editorialist.  A sample of the fun: “For his opening salvo Mr. Porter turns to R.A. Radford’s famous article on the employment of cigarettes as money in German P.O.W. camps, noting how, according to Radford, the prices of other goods […]

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Stepping Stones

Posted by Gonzalo Schwarz
November 20, 2011
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Cato’s 29th annual monetary conference gathered public policy scholars and academics to debate monetary reforms in the US and around the world. They proposed solutions and ways out of the current recession and crises by fixing the monetary policy system. One of the academics present was professor George Selgin from the University of Georgia. Although […]

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FREE BANKING: Theory, history, and a Laissez-Faire Model

Posted by Gonzalo Schwarz
November 7, 2011
in Blog

Free Banking: Theory, History and a Laissez-Faire Model by Larry Sechrest is a magnificent work, now rescued from undeserved obscurity with this new edition. Published in 1993, it is a formalization and extension of literature in the free banking area, with important correctives and clarifications. He argues that the debate over central banking and free […]

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Saving, Hoarding and Fractional Reserve Banking

July 28, 2011
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Fractional reserves is an important component of financial stability. Most of the financial regulation is aimed to control this aspect of banking practice such that banks do not become insolvent and a contagious set of bank runs gets into the financial markets. It is as if banks were unable to control themselves and regulation coming […]

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The Effect of Deposit Insurance on the Good Bank and the Bad Bank

June 9, 2011
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Deposit insurance, it is argued, is needed to cope with inherent fragility of banking and money market. To avoid panics, or financial crisis, a safety net on the system is required. Of course, such safety, is not free. There are not only direct economic costs, there are also indirect economic costs associated with the problem […]

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“The State and 100 Percent Reserve Banking” – Selgin

Posted by Tom Duncan
May 31, 2011
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“Free bankers have been fighting a war on two fronts. On one they face champions of central banking and managed money. On the other they struggle against advocates of 100-percent reserve banking. Although the second front is a lot smaller than the first, it’s far from being unimportant, in part because the battle there is […]

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“How Would the Invisible Hand Handle Money?” – Selgin and White

Posted by Tom Duncan
May 13, 2011
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“It is easy to note what is absent from a pure laissez faire monetary regime. There is no government control of the quantity of exchange media. There is no state-sponsored central bank. There are not legal barriers to entry, branching, or exit of commercial banks (or non-bank financial institutions, assuming any distinction can be drawn). […]

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Are Bank Runs a Problem for laissez-faire Banking?

April 21, 2011
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The problem of bank runs is probably the most serious concern in monetary economics. It is clear that if all clients claim back their depositors together the bank will fail. This situation, it is argued, puts the banks in an unstable position where their clients may try to run each other to get their deposits […]

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Why Study Free Banking?

April 15, 2011
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Last Tuesday ATLAS’ Sound Money Project held a panel with the title of “Making the Case for Sound Money” at the 2011 APEE Conference. Jorge Borlandelli from The Nassau Institute, myself from Suffolk University, Tom Duncan from GMU/Sound Money Project and Gerald O’Driscoll from The Cato Institute as discussant were in the panel. I tried […]

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Where Did the Free Banking Debate Go?

March 31, 2011
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The discussion in monetary institutions is becoming increasingly relevant in economics. How to deal and avoid financial crisis is an important issue. The recent financial crisis showed that economics might not be as suited to foresee and deal with these problems as the theory seems to suggest. This analysis requires a benchmark in the same […]

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Larry White on Free Banking and Gold

Posted by Tom Duncan
March 18, 2011
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Larry White gives a lecture on the benefits of Free Banking and the Gold Standard at the Cato Monetary Conference in November, 2010. Watch it here. Larry White on Free Banking and Gold  Sheldon Richman Anything Peaceful, March 8, 2011.  Via the Foundation for Economic Education. Image by Salvatore Vuono / FreeDigitalPhotos.net.

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Was there a free banking experience in the United States?

March 10, 2011
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An important aspect of the study of sound money is to correctly identify historical cases of free markets in money and banking versus regulated markets in money and banking. If we cannot correctly separate one from another then our conclusions will inevitably be biased. The period known in the U.S. as the “free banking era” […]

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Dollar Based Free Banking: A Possible Road to Sound Money?

February 10, 2011
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In The Theory of Free Banking (1988), George Selgin offers a monetary reform proposal to go from the actual monetary system based on a monopolistic control of money to a competitive banking system (pp. 164-172). There are different reasons (economic, institutional, political, psychological, etc.) why the return to banking based in a commodity like gold […]

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Second Annual Sound Money Essay Contest

Posted by Alex Chafuen
December 30, 2010
in Blog

Is the world economy in crisis because it lacks the fundamentals of sound money?  If you believe that sound money is the key to our recovery, tell us why.    Join Atlas’s 2nd Annual Sound Money Essay Contest and win cash prizes.  This  year’s theme is “Money in Crisis.”  Deadline is January 15th, 2011.

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Getting on Track

Posted by Tom Duncan
November 12, 2010
in Blog

On Wednesday, November 10, Sound Money held a panel at annual Liberty Forum hosted by Atlas. The panel featured Judy Shelton, Sean Fieler and Steven Horwitz, with Matt Kibbe of FreedomWorks acting as moderator. Perhaps it is a bit self-serving to say that it was excellent, but the point still stands. I, personally, had little […]

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“Toward a Free-Market Money”

Posted by Tom Duncan
October 27, 2010
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“Despite the overwhelming evidence that markets perform best when left alone by the government, it is still virtually taken for granted that one consumer product should be completely controlled by every government in the world. One product, so ubiquitous, that it’s used by almost everyone in the world on a daily basis: money. Money is […]

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Central Banking, Limited Purpose Banking, Free Banking…

Posted by Tom Duncan
October 12, 2010
in Blog

“But if the problem isn’t in the application of the system, but it is the system, then all efforts to reform practice will fail, and fail miserably. This is what we believe the logic of economic argument leads one to conclude about central banking and government monopoly over the currency. We also believe that the […]

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The Money Debate

Posted by Tom Duncan
August 4, 2010
in Blog

In the battle of ideologies, the libertarian always faces certain disadvantages. The foundation is, as the name implies, liberty. Yet there is no strict use towards which “liberty” can be put. It is a somewhat amorphous idea, and context changes its meaning. That is not to say that an individual libertarian is inconsistent, or at […]

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The Experience of Free Banking

Posted by Tom Duncan
July 21, 2010
in Blog

“There was controversy over how much power the central bank should have and what it should try to do, but no respectable economist suggested that central banking itself was unnecessary or harmful until Hayek finally despaired of it in 1976 and began to argue that the only way to achieve monetary stability was to denationalize […]

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“Illinois Free Banking Experience”

Posted by Tom Duncan
July 21, 2010
in Blog

“Recent studies by Rolnick and Weber (1983, 1984) have presented evidence challenging the conventional view of the Free Banking Era (1837-1863). The conventional view depicts a period of financial chaos in which lenient regulations gave rise to a plethora of banks, bank notes and coun-terfeit bank notes, unscrupulous “wildcat” bankers, and large noteholder losses. Rolnick […]

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“New Evidence on the Free Banking Era”

Posted by Tom Duncan
July 21, 2010
in Blog

“The United States has experienced many periods of major banking panics during which a large number of banks have failed and financial markets have been in considerable disarray. The period consid-ered by many as the worst is the one period when banks were more or less left alone to pursue their own profit-motivated interests, the […]

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“Free Banking and Information Asymmetry”

Posted by Tom Duncan
July 21, 2010
in Blog

“A traditional argument against free banking is that it will collapse because of information externalities: it is impossible for depositors to tell whether a high deposit rate offered by a bank is due to its high efficiency or risky lending strategy. This paper shows that in a separating equilibrium a higher-quality bank offers a lower […]

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“Free Banking and Monetary Control”

Posted by Tom Duncan
July 21, 2010
in Blog

“Were free banking to reemerge today, it would probably be based, not on a gold standard, but on irredeemable paper (‘fiat’) base money issued by a former or extant central bank. Under this form of free banking, the price level is no longer given, and conventional monetary policy questions remain relevant. In particular, would free […]

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Reflections on Money

Posted by Tom Duncan
June 25, 2010
in Blog

On Thursday, June 17, I attended a lecture by Dr. Benjamin Powell of Suffolk University. He spoke at the Charles G. Koch Foundation, giving one of his excellent lectures on Somalia and its Stateless society. While the lecture itself is well worth hearing, one of the most fundamental statements made came almost as an aside. […]

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“Monetary Central Planning and the State”

Posted by Tom Duncan
May 28, 2010
in Blog

The Future of Freedom Foundation has an in-depth history of the debate over a monetary central authority. Dr. Richard Ebeling offers his stunning knowledge on the subject in a 40 part series entitled “Monetary Central Planning and the State”. To read his work, here is a link to the FFF’s Freedom Daily. “Monetary Central Planning […]

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“Free Banking for Zimbabwe”

Posted by Tom Duncan
May 26, 2010
in Blog

“Zimbabwe’s hyperinflation is destroying the economy, pushing more of its inhabitants into poverty and forcing millions of Zimbabweans to emigrate. Since 1997, inflation has surged by 1,030,217%, while living standards (as measured by real GDP per capita) have fallen by 35%. In addition, hyperinflation has robbed people of their savings and financial institutions of their […]

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Free Banking in Britain

Posted by Tom Duncan
May 26, 2010
in Blog

“Free banking, generically speaking, denotes a monetary system without a central bank, under which the issuing of currency is left to private banks. This book explores how this could work in practice by examining how this has worked historically, specifically in the United Kingdom in the early 19th century. After building a theory of free […]

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Good Money

Posted by Tom Duncan
May 25, 2010
in Blog

“This is the true and remarkable story of private coinage and banking in Britain in the early years of the Industrial Revolution (1775-1850). Making money was a business in demand. The needs of business for small denominations were changing. Merchants needed small denomination coins in copper and silver. The Royal Mint couldn’t be bothered. It […]

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George Selgin – Central Banks as Sources of Financial Instability

May 6, 2010
in Blog

“The present financial crisis has set in bold relief the Jekyll and Hyde nature of contemporary central banks. It has made apparent both our utter dependence on such banks as instruments for assuring the continuous flow of credit in the aftermath of a financial bust and the same institutions’ capacity to fuel the financial booms […]

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Lawrence H. White – Sound Money and Free Banking

May 2, 2010
in Blog

On April 19, 2010, the Atlas Economic Research Foundation and the GMU Economics Society hosted a lecture by Lawrence H. White. Dr. White presented on the subject of sound money, it’s importance and historical origins, and how a free banking system produces a more reliable currency than that of the Federal Reserve. The video of […]

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The Rationale of Central Banking and the Free Banking Alternative

Posted by Tom Duncan
December 9, 2009
in Blog

“In the present century centralised banking systems have come to be regarded as the usual concomitant, if not one of the conditions of the attainment of an advanced stage of economic development. The belief in the desirability of central bank organisation is universal. Recently also there have been attempts to widen the unit of control […]

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