Banks under a free-banking system, like banks with fractional reserves under any other system, are susceptible to runs. Free-banking theorists maintain that the option clause would be one effective means of dealing with runs on banks.
During the past decade a significant change has occurred in the kinds of questions explored by monetary economists. Heretofore, one of the central issues concerned the “rules versus discretion” debate of a central bank empowered monopolistically to supply base money.
From The Review of Austrian Economics Vol. 8, No. 2, 1995.
From The Review of Austrian Economics Vol. 6, No. 1, 1992.
Richard H. Timberlake A Critique of Monetarist and Austrian Doctrines on the Utility and Value of Money Acrobat 3.0 Import Plug-in
Greenspan speaks of a condundrum whereby long-term yields on government bonds are surprisingly low. Why anyone would invest in them is a legitimate question, writes Stefan Karlsson.
Modern monetary systems operate on the ability to turn debt into money.
