Cyprus and the Unraveling of Fractional-Reserve Banking
A few more banking crises will likely cause confidence in the fractional-reserve banking system to evaporate.
America’s Great Depression Quotes of the Week: Bank Failures and Real Monetary Reform
The Road Not Taken in 1933 and its Modern Consequences
The Cyprus Deal and the Unraveling of Fractional-Reserve Banking
The “Cyprus deal” as it has been widely referred to in the media may mark the next to last act in the the slow motion collapse of fractional-reserve banking that began with the implosion of the savings-and-loan industry in the U.S. in the late 1980s. This trend continued with the currency crises in Russia, Mexico, East Asia and Argentina in the 1990s in which fractional-reserve banking played a decisive role.
How Banks Go Bust
[The Case Against the Fed, Chapter 8, “Problems for the Fractional-Reserve Banker: Insolvency.” (Slightly edited for publication as a separate article.)]
The fractional-reserve banker, even if he violates his contract, cannot be treated as an embezzler and a criminal; but the banker must still face the lesser, but still unwelcome fact of insolvency. There are two major ways in which he can become insolvent.
Bank Crisis!
Why does this domino process affect only banks, and not real estate, publishing, oil, or any other industry that may get into trouble?
Why the Greenbackers Are Wrong
A subset of the end-the-Fed crowd opposes the Fed for peripheral or entirely wrongheaded reasons.
AERC in the Classroom
Robert Wenzel reports, regarding his Hazlitt Memorial Lecture at AERC:
Stopping the Keynesian Death March
In a previous Circle Bastiat post, I highlighted Rothbard’s recommendations for reducing deficits.
The two major points were:
1. “While deficits are often inflationary and always pernicious, curing them by raising taxes is equivalent to curing an illness by shooting the patient.”
2. “Deficits, then, should be eliminated, but only by cutting government spending.”
Mainstream Economics
This new paper from Economic Inquiry provides a new meaning to Harry Truman’s famous desire for a one-armed economist:
The Most Important Question about Human History
According to Gary North, it is: why did economic growth compound, starting in the 1800s? There is no definitive answer yet. But North thinks Deirdre McCloskey is on the right track by looking to the 17th century Dutch for the root cause.
The Lou Church Memorial Lecture, sponsored by the Lou Church Foundation, presented at the Austrian Economics Research Conference. Recorded 21 March 2013 at the Ludwig von Mises Institute. Includes an introduction by Joseph T. Salerno.
