Free Banking and The Dollar

While I’m all for monetary freedom and competition, I’m also for reforming the U.S. dollar, which for me means freeing it from control by discretionary central bankers.


We Are All Free Banking Theorists Now*

If even economists who’ve never heard of free banking, or who dismiss both it and the people who take it seriously, nevertheless subscribe to some free banking theories of their own, where do their theories come from?


William Jennings Bryan and the Founding of the Fed

William Jennings Bryan, the most stalwart enemy of both private currency and currency monopoly since Andrew Jackson, helped to create a currency monopoly far more powerful than any that Jackson could ever have envisaged, and far more capable of gratifying Wall Street, at the expense of the rest of the nation, than Wall Street alone, […]

Fedophilia: Irrational Adoration of the Federal Reserve System

Although the movement to “End the Fed” has a considerable popular following, only a very tiny number of economists—our illustrious contributors amongst them—take the possibility seriously. For the rest, the Federal Reserve System is, not an ideal currency system to be sure (for who would dare to call it that?), but, implicitly at least, the […]


Intermediate Spending Booms

A number of recent exchanges between Market Monetarists and their critics, and especially those of their critics associated with the Austrian school, have debated the contribution of excessively easy Fed policy toward the housing boom and bust. The issue boils down to this: can monetary policy really be said to have contributed to the housing […]

The Economist On Money and the State

I couldn’t help being glad to see The Economist refer to Carl Menger’s theory of the origins of money just as I was about to explain that theory to my undergraduate classes. Nor did I at all mind having Menger’s ideas contrasted with those of another of my favorite economists, Charles Goodhart. I was, however, […]

The Cobden Survey

In June, 2010 the Cobden Centre in London released a report on “Public Attitudes on Banking,” based on a questionnaire to which 2000 Britons responded. The findings of that report have since been offered, both by the Cobden Centre itself and by others, as proof that many people today believe that banks store rather than […]


Reply to Salerno on Freedom in Banking

Oh no: I’ve gone and punched the 100-percent wasp’s nest again, and the wasps are responding predictably. Among them Joe Salerno stands out like a hornet among gall wasps, for Joe is an outstanding historian of monetary thought, and no mean monetary economist generally. Besides, you just can’t dislike the guy. Were I forced by […]

Paper Bugs, or, Stupid Arguments Against Gold

Persons familiar with my writings on monetary reform know that, far from being anyone’s idea of a gold bug, and despite my conviction that those monies work best that governments govern least, I’ve always shied away from arguing that we ought to re-establish a gold standard. Instead, I’ve favored reforms aimed at preserving our existing […]

Is Fractional-Reserve Banking Inflationary?

Certain economists of the Austrian School, and followers of Murray Rothbard especially, oppose fractional reserve banking for at least three reasons. They claim that banks resorting to it defraud people, that they bring about business cycles, and that their activities cause inflation. This article addresses the last claim only: I hope to discuss the others […]

Free Banking and Economic Development, Part 2

When Adam Smith first drew attention to the benefits of fractional-reserve banking, those benefits were but a glimmer of far more impressive gains to come. In 1776, the year of the appearance of Smith’s Wealth of Nations, Scotland had only 10 note-issuing banks, the two oldest of which, the Bank of Scotland and the Royal […]

Free Banking and Economic Development, Part 1

The most tangible achievements of the free market—the vast improvements in technology and productivity, the industrial plant and infrastructure from which these derive, and the extensive retailing networks that deliver industry’s fruits to consumers—would be far more meager were it not for past and present lending financed by fractionally-backed bank liabilities.

The Folly that is “Local” Currency

How’s this for a great idea: we build a small fleet of cars, and market them to people in the local community. How do we compete with Ford, G.M., Toyota, and all those other huge car companies? Easy. You see, our cars will have special octane requirements that will prevent them from refilling at ordinary […]

Where’s My Model?

Anyone who peruses my work on free banking—or my other writings for that matter—will notice that I’m not especially inclined to express my ideas mathematically. To put the matter more positively: I prefer plain English. The preference has if anything grown more marked over time. While writing Good Money, for example, I at one point […]

Capital and Cash Reserves

I promise to make this my last post for a while concerning the matter of 100-percent versus fractional-reserve banking. However, in addressing some comments on my recent posts it occurred to me that some very serious misunderstanding is at play concerning the difference between a bank’s capital and its cash reserves. The distinction between these […]

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