The Role of Fractional-Reserve Banking and Financial Intermediation in the Money Supply Process: Keynes and the Austrians
This article presents two alternative interpretations of the role of banks in the monetary transmission process. The interpretation based on the work of Mises, Hayek, and Rothbard leads to the conclusion that central banking and monetary policy are "generators of the business cycle." The other interpretation presents a Keynesian theory minus the liquidity preference theory of the rate of interest.