At its hundredth anniversary, the Federal Reserve System's powers are greater than ever, its asset holdings make it far larger, by assets, than any of the world's profit-oriented financial firms, and it commands worldwide prestige. But what has this prestige got to do with the Fed's actual...

In the late eighteenth and early nineteenth century, Scotland had a stable financial system. Its stability arose from the pressure that private banks, which had the right to issue bank notes, placed on each other to behave prudently. Unlike in England, the Scottish banking system had no central...

Modern paper currency contributes little to productive investment. This shortcoming is not inherent to paper money. It stems from the fact that such money is monopolistically supplied by public monetary authorities that are poor intermediaries. Commercial banknotes, in contrast, are just as...

Intro -- _Hlk488832294 -- __DdeLink__3072_333543986 -- Figure 1 Spending equilibrium: free banking -- Figure 2 Quarterly value of Fedwire transactions and nominal GDP (1992 = 100) -- Figure 3 US CPI (average 1982-84 = 100), US nominal GDP (million of dollars) -- The authors -- Foreword --...

Modern accounts of the origins of fractional-reserve banking, in economics textbooks and elsewhere, often assert that London goldsmiths came up with the idea around the middle of the 17th century, and first implemented it by clandestinely lending coin that they were supposed to keep locked away...

In light of the Great Financial Crisis, it should now be clear, in case it wasn't long ago, that central banks generally, and the Federal Reserve in particular, not only are unable to prevent financial and monetary catastrophes, but are unable to resist pursuing policies that inadvertently help...

In Lombard Street, Walter Bagehot (1873) offered his famous advice for reforming the Bank of England's lending policy. The financial crisis of 1866, and other factors, had convinced Bagehot that instead of curtailing credit to conserve the Bank's own liquidity in the face of an “internal...