The current Greek crisis is exposing the elephant in the room - a worldwide problem getting progressively worse by the day. It’s a problem that has plagued developed economies for the last two centuries. A problem currently metastasized into a full-blown cancer
I recently got into a discussion with Philipp Bagus about what the real market test for fractional-reserve banking would be. One potential market test to at least test for the potential viability of the banking model would be to see
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We currently face a monumental dilemma. How do we extract ourselves from all this excessive debt without crashing the world economy? There is a solution which is totally counterintuitive: print even more money. In other words, to get out of
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Dave Howden Lecturing at Rothbard University 2014
Three cheers to Steve Baker, Conservative MP from Wycombe, for raising the delicate yet important of matter of fractional-reserve banking in Britain´s House of Commons. We are in a debt crisis of historic proportions because for far too long profit-maximising
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Suppose you bring a fur coat to a dry cleaner, and discover that the owner allowed his wife to wear it before cleaning it (which is also the subject of an episode from Seinfeld). Or, suppose you gave your car keys
Reprinted from the Carl Menger Center for the Study of Money and Banking he perfect banking system, like the perfect monetary system, is one which serves the needs of consumers and savers, and not the needs of the government. It
What role do bank deposits serve? If you asked this to a run-of-the-mill bank customer they would likely tell you that they are looking for some safety reserve to cover expenses. Ask a banker and the answer could well be
Should we print, not print? Stimulate, not stimulate? Is austerity the right or wrong policy? Is government spending or printing effective? If we ask two economists these questions, we will likely get three opinions for each question. Economists seem confused,
Nothing gets the liberal press’s pom-poms twirling like the threat of bank regulation. Ever since the financial crisis in 2008 and subsequent bailout of Wall Street, progressive pols have had their sights set on the banking class. The animosity makes
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In the aftermath of the demise of bitcoin bank Mt. Gox comes a few startling revelations. A newly released “Crisis Strategy Draft” confirms some unfortunate truths long suspected of its handling of clients’ bitcoin deposits. (The document might be a
A currency is only as safe as the bank that stores it. Nowhere is this more apparent than in the recent turmoil in the bitcoin community. One the primary advantages of bitcoin, perhaps even the greatest advantage of the cryptocurrency,
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Enough people were upset with my previous post claiming that Mt. Gox is suffering a bitcoin bank run because it is holding only a fractional bitcoin reserve that it caused me to think twice about the claim. I could have
Ever wonder what a digital bank run looks like? Nearly one million Mt. Gox users are finding out first hand. The Tokyo-based exchange, popular amongst currency traders, has risen in prominence by offering its customers storage services in a variety
After last week´s decision by HSBC to halt its policy of not honouring large withdrawal requests by depositors comes news of the Russian bank “My Bank” implementing its own run-protection measure. “My Bank”, one of Russia´s top 200 lenders by
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What do the following road signs share in common? You probably answered that they are all confusing, and I would agree. Some of you would have answered that they all involve conflict, and that too is correct. The most astute
There are many limitations to the extent to which banks can expand credit. The main ones are (1) the limitation imposed by required reserves, (2) the limitation imposed by capital leverage ratios, and (3) the limitation imposed by liquidity requirements.
Economists view the money creation process through two separate channels. Each has its own economic effects as well as risks. In the current fiat monetary system, central banks can increase the amount of base money through their open-market operations. The
Think back to your high-school math class, and reminisce about this question: “Train A departs from Union Station at noon travelling eastward to Halifax at a speed of 80km/hr. Train B departs three hours later from the same station travelling
In the spirit of the holiday season, I recently watched the classic film It’s a Wonderful Life. Starring the drawl-voiced James Stewart, the movie depicts numerous hardships faced by small town loan man George Bailey. The film is well-renowned for
