[Carl Veritas]

Karl saw the recurring boom and bust that accompanied the arrival of the industrial revolution.
He concluded that the flaw lies deep within the market system itself, and what was needed to correct it was
massive government intervention. He didn’t make the connection to the banking practice at the time.

The old Soviet Unions socialist economy failed precisely because it did not have capitalists nor markets. They had government planners.

Fluctuating prices in the free market aligns production with consumption. A rising price for something signals entrepreneurs that there’s profit in producing that something. Private property are then mobilized to meet the demand by profit- seeking, loss avoiding capitalists. Profits (or lack of) reveals if their endeavor and methods are sound.
The recurring shortages in socialist economies occur because their planners cannot make those economic calculations.

Karl’s vision was thrown out by the Russians and the Cubans are still standing in long lines.

[Carl Veritas]

Karl saw the recurring boom and bust that accompanied the arrival of the industrial revolution.
He concluded that the flaw lies deep within the market system itself, and what was needed to correct it was
massive government intervention. He didn’t make the connection to the banking practice at the time.

The old Soviet Unions socialist economy failed precisely because it did not have capitalists nor markets. They had government planners.

Fluctuating prices in the free market aligns production with consumption. A rising price for something signals entrepreneurs that there’s profit in producing that something. Private property are then mobilized to meet the demand by profit- seeking, loss avoiding capitalists. Profits (or lack of) reveals if their endeavor and methods are sound.
The recurring shortages in socialist economies occur because their planners cannot make those economic calculations.

Karl’s vision was thrown out by the Russians and the Cubans are still standing in long lines.

[Carl Veritas]

Panama has no central bank. It uses the US dollar as its currency and what inflation they have comes from our own central bank monetary policy.
Since there is no one to bail out banks they behave with prudence, or they go out of business. Just a small preview of a banking system without a central bank.

Congress can abolish the Federal Reserve system
but it will take an informed electorate to get there.

It will take awhile to fight a deeply rooted belief, however.

Karl Marx in the late eighteenth century saw the recurring boom and bust when the industrial revolution began. He and economists of the time figured the problem lies within the capitalist market economy itself and what was needed to correct it was massive government intervention.

So the idea of government intervention in the economy as necessary goes way back. It is like
a punch served at most American universities.
No one hardly ever question the idea because most drank from the same punch bowl.

The Scottish David Hume and Englishman David Ricardo figured out that the actual cause was the activities of an institution that arrived on the scene—banking.

You might enjoy this article from Rothbard:

http://mises.org/story/3127

[Carl Veritas]

Panama has no central bank. It uses the US dollar as its currency and what inflation they have comes from our own central bank monetary policy.
Since there is no one to bail out banks they behave with prudence, or they go out of business. Just a small preview of a banking system without a central bank.

Congress can abolish the Federal Reserve system
but it will take an informed electorate to get there.

It will take awhile to fight a deeply rooted belief, however.

Karl Marx in the late eighteenth century saw the recurring boom and bust when the industrial revolution began. He and economists of the time figured the problem lies within the capitalist market economy itself and what was needed to correct it was massive government intervention.

So the idea of government intervention in the economy as necessary goes way back. It is like
a punch served at most American universities.
No one hardly ever question the idea because most drank from the same punch bowl.

The Scottish David Hume and Englishman David Ricardo figured out that the actual cause was the activities of an institution that arrived on the scene—banking.

You might enjoy this article from Rothbard:

http://mises.org/story/3127

[Carl Veritas]

Panama has no central bank. It uses the US dollar as its currency and what inflation they have comes from our own central bank monetary policy.
Since there is no one to bail out banks they behave with prudence, or they go out of business. Just a small preview of a banking system without a central bank.

Congress can abolish the Federal Reserve system
but it will take an informed electorate to get there.

It will take awhile to fight a deeply rooted belief, however.

Karl Marx in the late eighteenth century saw the recurring boom and bust when the industrial revolution began. He and economists of the time figured the problem lies within the capitalist market economy itself and what was needed to correct it was massive government intervention.

So the idea of government intervention in the economy as necessary goes way back. It is like
a punch served at most American universities.
No one hardly ever question the idea because most drank from the same punch bowl.

The Scottish David Hume and Englishman David Ricardo figured out that the actual cause was the activities of an institution that arrived on the scene—banking.

You might enjoy this article from Rothbard:

http://mises.org/story/3127

[Carl Veritas]

Panama has no central bank. It uses the US dollar as its currency and what inflation they have comes from our own central bank monetary policy.
Since there is no one to bail out banks they behave with prudence, or they go out of business. Just a small preview of a banking system without a central bank.

Congress can abolish the Federal Reserve system
but it will take an informed electorate to get there.

It will take awhile to fight a deeply rooted belief, however.

Karl Marx in the late eighteenth century saw the recurring boom and bust when the industrial revolution began. He and economists of the time figured the problem lies within the capitalist market economy itself and what was needed to correct it was massive government intervention.

So the idea of government intervention in the economy as necessary goes way back. It is like
a punch served at most American universities.
No one hardly ever question the idea because most drank from the same punch bowl.

The Scottish David Hume and Englishman David Ricardo figured out that the actual cause was the activities of an institution that arrived on the scene—banking.

You might enjoy this article from Rothbard:

http://mises.org/story/3127

[Carl Veritas]

Panama has no central bank. It uses the US dollar as its currency and what inflation they have comes from our own central bank monetary policy.
Since there is no one to bail out banks they behave with prudence, or they go out of business. Just a small preview of a banking system without a central bank.

Congress can abolish the Federal Reserve system
but it will take an informed electorate to get there.

It will take awhile to fight a deeply rooted belief, however.

Karl Marx in the late eighteenth century saw the recurring boom and bust when the industrial revolution began. He and economists of the time figured the problem lies within the capitalist market economy itself and what was needed to correct it was massive government intervention.

So the idea of government intervention in the economy as necessary goes way back. It is like
a punch served at most American universities.
No one hardly ever question the idea because most drank from the same punch bowl.

The Scottish David Hume and Englishman David Ricardo figured out that the actual cause was the activities of an institution that arrived on the scene—banking.

You might enjoy this article from Rothbard:

http://mises.org/story/3127

[Carl Veritas]

Bankers helped shaped banking laws and our monetary system. We have lived with the current financial
system for so long we hardly question it. When trouble comes we blame a particular banker or come up with new regulations, and move on.

But we never seem to take a closer look at the fragile nature of the fractional banking system itself: it is highly leveraged.

If we all withdrew our bank deposits this Monday, the ensuing bank panic can cause an economic meltdown. Can it really be that fragile?

Since banks never have enough cash to honor all withdrawals at once, they will have to call in loans early and cause businesses to fail.

In the early years of bank runs, it never occurred to bankers to solve the problem by keeping more of depositors money in hand. The FDIC was created not because it keeps enough cash to honor simultaneous withdrawals. It’s to discourage depositors from withdrawing at once to allow the bankers to continue their business practice: collecting interest from money that was created by banking law. If a bank takes a dollar in deposit then loans out eight, the bank is essentially collecting interest on the phantom eight dollars. That is fractional reserve banking. Except those pesky withdrawals remains a threat even with the creation of the central bank.

Withdrawals anyone?

[Carl Veritas]

Bankers helped shaped banking laws and our monetary system. We have lived with the current financial
system for so long we hardly question it. When trouble comes we blame a particular banker or come up with new regulations, and move on.

But we never seem to take a closer look at the fragile nature of the fractional banking system itself: it is highly leveraged.

If we all withdrew our bank deposits this Monday, the ensuing bank panic can cause an economic meltdown. Can it really be that fragile?

Since banks never have enough cash to honor all withdrawals at once, they will have to call in loans early and cause businesses to fail.

In the early years of bank runs, it never occurred to bankers to solve the problem by keeping more of depositors money in hand. The FDIC was created not because it keeps enough cash to honor simultaneous withdrawals. It’s to discourage depositors from withdrawing at once to allow the bankers to continue their business practice: collecting interest from money that was created by banking law. If a bank takes a dollar in deposit then loans out eight, the bank is essentially collecting interest on the phantom eight dollars. That is fractional reserve banking. Except those pesky withdrawals remains a threat even with the creation of the central bank.

Withdrawals anyone?

[Carl Veritas]

Bankers helped shaped banking laws and our monetary system. We have lived with the current financial
system for so long we hardly question it. When trouble comes we blame a particular banker or come up with new regulations, and move on.

But we never seem to take a closer look at the fragile nature of the fractional banking system itself: it is highly leveraged.

If we all withdrew our bank deposits this Monday, the ensuing bank panic can cause an economic meltdown. Can it really be that fragile?

Since banks never have enough cash to honor all withdrawals at once, they will have to call in loans early and cause businesses to fail.

In the early years of bank runs, it never occurred to bankers to solve the problem by keeping more of depositors money in hand. The FDIC was created not because it keeps enough cash to honor simultaneous withdrawals. It’s to discourage depositors from withdrawing at once to allow the bankers to continue their business practice: collecting interest from money that was created by banking law. If a bank takes a dollar in deposit then loans out eight, the bank is essentially collecting interest on the phantom eight dollars. That is fractional reserve banking. Except those pesky withdrawals remains a threat even with the creation of the central bank.

Withdrawals anyone?

[Carl Veritas]

Bankers helped shaped banking laws and our monetary system. We have lived with the current financial
system for so long we hardly question it. When trouble comes we blame a particular banker or come up with new regulations, and move on.

But we never seem to take a closer look at the fragile nature of the fractional banking system itself: it is highly leveraged.

If we all withdrew our bank deposits this Monday, the ensuing bank panic can cause an economic meltdown. Can it really be that fragile?

Since banks never have enough cash to honor all withdrawals at once, they will have to call in loans early and cause businesses to fail.

In the early years of bank runs, it never occurred to bankers to solve the problem by keeping more of depositors money in hand. The FDIC was created not because it keeps enough cash to honor simultaneous withdrawals. It’s to discourage depositors from withdrawing at once to allow the bankers to continue their business practice: collecting interest from money that was created by banking law. If a bank takes a dollar in deposit then loans out eight, the bank is essentially collecting interest on the phantom eight dollars. That is fractional reserve banking. Except those pesky withdrawals remains a threat even with the creation of the central bank.

Withdrawals anyone?

[Carl Veritas]

Bankers helped shaped banking laws and our monetary system. We have lived with the current financial
system for so long we hardly question it. When trouble comes we blame a particular banker or come up with new regulations, and move on.

But we never seem to take a closer look at the fragile nature of the fractional banking system itself: it is highly leveraged.

If we all withdrew our bank deposits this Monday, the ensuing bank panic can cause an economic meltdown. Can it really be that fragile?

Since banks never have enough cash to honor all withdrawals at once, they will have to call in loans early and cause businesses to fail.

In the early years of bank runs, it never occurred to bankers to solve the problem by keeping more of depositors money in hand. The FDIC was created not because it keeps enough cash to honor simultaneous withdrawals. It’s to discourage depositors from withdrawing at once to allow the bankers to continue their business practice: collecting interest from money that was created by banking law. If a bank takes a dollar in deposit then loans out eight, the bank is essentially collecting interest on the phantom eight dollars. That is fractional reserve banking. Except those pesky withdrawals remains a threat even with the creation of the central bank.

Withdrawals anyone?

[Carl Veritas]

Informed Polity?

http://www.mises.org/story/2837

Josh, the Mexican government defaulted on their bonds
and the large NY banks were holding a chunk of it.

The Fed performed for its creators and bailed them out. But bailing the banks, sticking the bill to the American taxpayer while labeling the action as a matter of national emergency needed political and intellectual cover. It was a grandslam right over the peoples heads.

An informed electorate is key, I agree.

But most members of the media and congress all the way up to the white house were drinking from the same punch bowl served at American universities.

How do we fix that?

[Carl Veritas]

Informed Polity?

http://www.mises.org/story/2837

Josh, the Mexican government defaulted on their bonds
and the large NY banks were holding a chunk of it.

The Fed performed for its creators and bailed them out. But bailing the banks, sticking the bill to the American taxpayer while labeling the action as a matter of national emergency needed political and intellectual cover. It was a grandslam right over the peoples heads.

An informed electorate is key, I agree.

But most members of the media and congress all the way up to the white house were drinking from the same punch bowl served at American universities.

How do we fix that?

[Carl Veritas]

Informed Polity?

http://www.mises.org/story/2837

Josh, the Mexican government defaulted on their bonds
and the large NY banks were holding a chunk of it.

The Fed performed for its creators and bailed them out. But bailing the banks, sticking the bill to the American taxpayer while labeling the action as a matter of national emergency needed political and intellectual cover. It was a grandslam right over the peoples heads.

An informed electorate is key, I agree.

But most members of the media and congress all the way up to the white house were drinking from the same punch bowl served at American universities.

How do we fix that?

[Author]

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