Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

More documents

Recommendations

Info

A Proposal for Banking Reform:The Theory of a 100-Percent Reserve Requirement 735a 100 percent-reserve banking system for exclusively practicalreasons, believing this requirement would make governmentmonetary policy easier and more predictable. Therefore thetheorists of the Chicago School have been guilty of naiveté inascribing to governments the desire and ability to administer astable monetary policy under all circumstances. 33 This naivetéparallels that shown by modern neo-banking defenders of fractional-reservefree banking when they rely on spontaneousinterbank liquidation and clearing mechanisms to halt underall circumstances planned, simultaneous expansion by mostbanks. These theorists fail to see that although a fractionalreservefree-banking system would have more limitations thanthe current system, it would not prevent the creation of fiduciarymedia, nor, logically, would it immunize the marketagainst economic crises. Hence we must conclude that the onlyeffective way to rid society of special privileges and economic cycles isto establish a free-banking system governed by legal principles; thatis, a 100-percent reserve requirement. 3433 As Pascal Salin states in his article on Maurice Allais, “Toute l’histoiremonétaire montre que l’État a refusé de respecter les règles monétaires etque la source ultime de l’inflation provient de ce défaut institutionnel.”Pascal Salin, “Maurice Allais: un économiste liberal?” p. 11. Thus we cannottrust that a central bank, which will always be influenced to someextent by the current political scene, will be able to maintain a monetarypolicy which immunizes society against the evils of economic cycles, evenif the desire is present and a 100-percent reserve requirement is establishedfor private banking. This is so because nothing bars the centralbank from directly financing state expenditures or, via open-market operations,acquiring massive numbers of treasury bonds and other securities,and thus injecting liquidity into the system through the capital marketand temporarily distorting the interest rate and society’s structure of productivestages. This would set in motion the inexorable mechanisms ofeconomic cycles, which would trigger a severe depression. This is theprima facie argument against the conservation of the central bank, and itshows the necessity of combining the re-establishment of legal principlesin private banking with the complete deregulation of the sector and theabolition of the central bank. On the traditional strong leaning towardinterventionism of the Chicago School, see “Symposium: Chicago versusthe Free Market,” Journal of Libertarian Studies 16, no. 4 (Fall, 2002).34 On the Keynesian side, James Tobin, who received the Nobel Prize forEconomics in 1981, has proposed a “deposit currency” system which
736 Money, Bank Credit, and Economic Cycles2OUR PROPOSAL FOR BANKING REFORMLogical deduction based on this book’s analysis points to aparticular program of banking reform: on the one hand, theinstitutions related to the financial market should be madecontingent on traditional legal principles; and on the other, thegovernment agencies which until now have controlled anddirected the financial system should be eliminated. We believethat in order to establish a truly stable financial and monetarysystem for the twenty-first century, a system which protectsour economies as far as possible from crises and recessions, thefollowing will be necessary: (1) complete freedom of choice incurrency; (2) a system of free banking and the abolition of thecentral bank; and most importantly, (3) obligatory observanceof traditional legal rules and principles by all agents involvedin the free-banking system, particularly the important principleaccording to which no one may enjoy the privilege of loaningsomething entrusted to him on demand deposit. In short, itis necessary to maintain at all times a banking system whichincludes a 100-percent reserve requirement. We will now discussin greater detail each component of our proposal.TOTAL FREEDOM OF CHOICE IN CURRENCYWe recommend the privatization of currency and an endto state and central-bank intervention with respect to itsissuance and control over its value. This goal requires theincorporates many aspects of the Chicago Plan for a 100-percent reserverequirement. See his “Financial Innovation and Deregulation in Perspective,”Bank of Japan Monetary and Economic Studies 3 (1985): 19–29.See also the comments Charles Goodhart makes on Tobin’s proposal ofa 100-percent reserve requirement in his The Evolution of Central Banks,pp. 87ff. Tobin seems to follow the tradition of Lauchlin Currie, The Supplyand Control of Money in the United States (1934; New York: Russell &Russell, 1968). More recently Alex Hocker Pollock has again defended asimilar banking system in his article, “Collateralized Money: An IdeaWhose Time Has Come Again?” Durrell Journal of Money and Banking 5,no. 1 (March 1993): 34–38. The main disadvantage of Pollock’s proposalis that it indicates reserves should be held not in money, but in assetswith a market value that makes them easy to liquidate.
Page 4 and 5:
MONEY,BANK CREDIT,ANDECONOMIC CYCLE
Page 6:
CONTENTSPREFACE TO THE THIRD ENGLIS
Page 13 and 14:
xiiMoney, Bank Credit, and Economic
Page 15 and 16:
xivMoney, Bank Credit, and Economic
Page 17 and 18:
xviMoney, Bank Credit, and Economic
Page 19 and 20:
xviiiMoney, Bank Credit, and Econom
Page 22 and 23:
PREFACE TO THESECOND ENGLISH EDITIO
Page 24 and 25:
Preface to the Second English Editi
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34:
Page 38 and 39:
PREFACE TOTHE THIRDSPANISH EDITIONI
Page 40:
Preface to the Third Spanish Editio
Page 43 and 44:
xliiMoney, Bank Credit, and Economi
Page 46 and 47:
INTRODUCTIONThe economic analysis o
Page 48 and 49:
Introductionxlviiand foreign exchan
Page 50 and 51:
IntroductionxlixThis book comprises
Page 52 and 53:
Introductionrecurrent phenomenon. I
Page 54:
Introductionand Professors Hans-Her
Page 57 and 58:
2 Money, Bank Credit, and Economic
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
100 Money, Bank Credit, and Economi
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 222 and 223:
4THE CREDITEXPANSION PROCESSThis ch
Page 224 and 225:
The Credit Expansion Process 169dif
Page 226 and 227:
The Credit Expansion Process 171rec
Page 228 and 229:
The Credit Expansion Process 173Eco
Page 230 and 231:
The Credit Expansion Process 175Soo
Page 232 and 233:
The Credit Expansion Process 177int
Page 234 and 235:
The Credit Expansion Process 179tra
Page 236 and 237:
The Credit Expansion Process 181Ban
Page 238 and 239:
The Credit Expansion Process 183the
Page 240 and 241:
The Credit Expansion Process 185Eur
Page 242 and 243:
The Credit Expansion Process 187Nev
Page 244 and 245:
The Credit Expansion Process 189ind
Page 246 and 247:
The Credit Expansion Process 191reg
Page 248 and 249:
The Credit Expansion Process 193If
Page 250 and 251:
The Credit Expansion Process 195The
Page 252 and 253:
The Credit Expansion Process 197of
Page 254 and 255:
Page 256 and 257:
The Credit Expansion Process 201d 1
Page 258 and 259:
The Credit Expansion Process 203Or
Page 260 and 261:
The Credit Expansion Process 20520
Page 262 and 263:
Page 264 and 265:
The Credit Expansion Process 209Thi
Page 266 and 267:
The Credit Expansion Process 211Res
Page 268 and 269:
The Credit Expansion Process 213t 3
Page 270 and 271:
Page 272 and 273:
The Credit Expansion Process 217Wit
Page 274 and 275:
Page 276 and 277:
The Credit Expansion Process 221(39
Page 278 and 279:
The Credit Expansion Process 223r =
Page 280 and 281:
The Credit Expansion Process 225
Page 282 and 283:
The Credit Expansion Process 227Now
Page 284 and 285:
The Credit Expansion Process 229a a
Page 286 and 287:
The Credit Expansion Process 231Dep
Page 288 and 289:
The Credit Expansion Process 233app
Page 290 and 291:
Page 292 and 293:
The Credit Expansion Process 237ban
Page 294 and 295:
The Credit Expansion Process 239FIL
Page 296 and 297:
The Credit Expansion Process 241now
Page 298 and 299:
The Credit Expansion Process 243DIF
Page 300 and 301:
Page 302 and 303:
Page 304 and 305:
Page 306 and 307:
The Credit Expansion Process 251mon
Page 308 and 309:
The Credit Expansion Process 253as
Page 310 and 311:
The Credit Expansion Process 255eve
Page 312 and 313:
Page 314 and 315:
Page 316 and 317:
The Credit Expansion Process 261(ad
Page 318:
The Credit Expansion Process 263con
Page 321 and 322:
Page 323 and 324:
Page 325 and 326:
Page 327 and 328:
Page 329 and 330:
Page 331 and 332:
Page 333 and 334:
Page 335 and 336:
Page 337 and 338:
Page 339 and 340:
Page 341 and 342:
Page 343 and 344:
Page 345 and 346:
Page 347 and 348:
Page 349 and 350:
Page 351 and 352:
Page 353 and 354:
Page 355 and 356:
Page 357 and 358:
Page 359 and 360:
Page 361 and 362:
Page 363 and 364:
Page 365 and 366:
Page 367 and 368:
Page 369 and 370:
Page 371 and 372:
Page 373 and 374:
Page 375 and 376:
Page 377 and 378:
Page 379 and 380:
Page 381 and 382:
Page 383 and 384:
Page 385 and 386:
Page 387 and 388:
Page 389 and 390:
Page 391 and 392:
Page 393 and 394:
Page 395 and 396:
Page 397 and 398:
Page 399 and 400:
Page 401 and 402:
Page 403 and 404:
Page 405 and 406:
Page 407 and 408:
Page 409 and 410:
Page 411 and 412:
Page 413 and 414:
Page 415 and 416:
Page 417 and 418:
Page 419 and 420:
Page 421 and 422:
Page 423 and 424:
Page 425 and 426:
Page 427 and 428:
Page 429 and 430:
Page 431 and 432:
Page 433 and 434:
Page 435 and 436:
Page 437 and 438:
Page 439 and 440:
Page 441 and 442:
Page 443 and 444:
Page 445 and 446:
Page 447 and 448:
Page 449 and 450:
Page 452 and 453:
6ADDITIONALCONSIDERATIONSON THE THE
Page 454 and 455:
Additional Considerations on the Th
Page 456 and 457:
Page 458 and 459:
Page 460 and 461:
Page 462 and 463:
Page 464 and 465:
Page 466 and 467:
Page 468 and 469:
Page 470 and 471:
Page 472 and 473:
Page 474 and 475:
Page 476 and 477:
Page 478 and 479:
Page 480 and 481:
Page 482 and 483:
Page 484 and 485:
Page 486 and 487:
Page 488 and 489:
Page 490 and 491:
Page 492 and 493:
Page 494 and 495:
Page 496 and 497:
Page 498 and 499:
Page 500 and 501:
Page 502 and 503:
Page 504 and 505:
Page 506 and 507:
Page 508 and 509:
Page 510 and 511:
Page 512 and 513:
Page 514 and 515:
Page 516 and 517:
Page 518 and 519:
Page 520 and 521:
Page 522 and 523:
Page 524 and 525:
Page 526 and 527:
Page 528 and 529:
Page 530 and 531:
Page 532 and 533:
Page 534 and 535:
Page 536 and 537:
Page 538 and 539:
Page 540 and 541:
Page 542 and 543:
Page 544 and 545:
Page 546 and 547:
Page 548 and 549:
Page 550 and 551:
Page 552 and 553:
Page 554 and 555:
Page 556 and 557:
Page 558 and 559:
Page 560 and 561:
Page 562 and 563:
Page 564 and 565:
7A CRITIQUE OFMONETARIST ANDKEYNESI
Page 566 and 567:
A Critique of Monetarist and Keynes
Page 568 and 569:
Page 570 and 571:
Page 572 and 573:
Page 574 and 575:
Page 576 and 577:
Page 578 and 579:
Page 580 and 581:
Page 582 and 583:
Page 584 and 585:
Page 586 and 587:
Page 588 and 589:
Page 590 and 591:
Page 592 and 593:
Page 594 and 595:
Page 596 and 597:
Page 598 and 599:
Page 600 and 601:
Page 602 and 603:
Page 604 and 605:
Page 606 and 607:
Page 608 and 609:
Page 610 and 611:
Page 612 and 613:
Page 614 and 615:
Page 616 and 617:
Page 618 and 619:
Page 620 and 621:
Page 622 and 623:
Page 624 and 625:
Page 626 and 627:
Page 628 and 629:
Page 630 and 631:
Page 632 and 633:
Page 634 and 635:
Page 636 and 637:
Page 638 and 639:
Page 640 and 641:
Page 642 and 643:
Page 644 and 645:
Page 646 and 647:
Page 648 and 649:
Page 650 and 651:
Page 652 and 653:
Page 654 and 655:
Page 656 and 657:
8CENTRAL AND FREEBANKING THEORYThis
Page 658 and 659:
Central and Free Banking Theory 603
Page 660 and 661:
Page 662 and 663:
Page 664 and 665:
Page 666 and 667:
Page 668 and 669:
Page 670 and 671:
Page 672 and 673:
Page 674 and 675:
Page 676 and 677:
Page 678 and 679:
Page 680 and 681:
Page 682 and 683:
Page 684 and 685:
Page 686 and 687:
Page 688 and 689:
Page 690 and 691:
Page 692 and 693:
Page 694 and 695:
Page 696 and 697:
Page 698 and 699:
Page 700 and 701:
Page 702 and 703:
Page 704 and 705:
Page 706 and 707:
Page 708 and 709:
Page 710 and 711:
Page 712 and 713:
Page 714 and 715:
Page 716 and 717:
Page 718 and 719:
Page 720 and 721:
Page 722 and 723:
Page 724 and 725:
Page 726 and 727:
Page 728 and 729:
Page 730 and 731:
Page 732 and 733:
Page 734 and 735:
Page 736 and 737:
Page 738 and 739:
Page 740 and 741: Central and Free Banking Theory 685
Page 770 and 771: 9A PROPOSAL FOR BANKINGREFORM: THE
Page 772 and 773: A Proposal for Banking Reform:The T
Page 840 and 841:
A Proposal for Banking Reform:The T
Page 842 and 843:
Page 844 and 845:
Page 846 and 847:
Page 848 and 849:
Page 850 and 851:
Page 852 and 853:
Page 854 and 855:
Page 856 and 857:
Page 858 and 859:
Page 860 and 861:
Page 862 and 863:
Page 864 and 865:
Page 866 and 867:
Page 868 and 869:
BIBLIOGRAPHYAbrams, M.A., Money in
Page 870 and 871:
Bibliography 815Bajo Fernández, M.
Page 872 and 873:
Bibliography 817Borch, K.H., Econom
Page 874 and 875:
Bibliography 819Coronel de Palma, L
Page 876 and 877:
Bibliography 821N. Durlauf and Lawr
Page 878 and 879:
Bibliography 823Galiani, F., Della
Page 880 and 881:
Bibliography 825Graham, F.D., “Pa
Page 882 and 883:
Bibliography 827——, Prices and
Page 884 and 885:
Bibliography 829translation by N. K
Page 886 and 887:
Bibliography 831——, “Keynes
Page 888 and 889:
Bibliography 833Russian edition by
Page 890 and 891:
Bibliography 835Keeler, J., “Empi
Page 892 and 893:
Bibliography 837——, “On Crisi
Page 894 and 895:
Bibliography 839——, “Professo
Page 896 and 897:
Bibliography 841Miller, H.E., Banki
Page 898 and 899:
Bibliography 843Neira, Alonzo, M.A.
Page 900 and 901:
Bibliography 845Raguet, C., “Repo
Page 902 and 903:
Bibliography 847——, “The Myth
Page 904 and 905:
Bibliography 849——, “Banking
Page 906 and 907:
Bibliography 851M.C. Marcuzzo (Chel
Page 908 and 909:
Bibliography 853——, “A Critiq
Page 910 and 911:
Bibliography 855Walker, A., The Sci
Page 912 and 913:
INDEX OF SUBJECTSAccelerator princi
Page 914 and 915:
Index of Subjects 859Banking reform
Page 916 and 917:
Index of Subjects 861objection to t
Page 918 and 919:
Index of Subjects 863Goal, concept
Page 920 and 921:
Index of Subjects 865See also Fract
Page 922 and 923:
Index of Subjects 867Plan, definiti
Page 924:
Index of Subjects 869Tragedy of the
Page 927 and 928:
Page 929 and 930:
Page 931 and 932:
Page 933 and 934:
Page 935 and 936:
show all

Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Create successful ePaper yourself

Delete template?

Save as template?