The record of past “free banking” systems, in which paper currency consisted of competitively supplied banknotes, contradicts the widespread belief that central banks play an essential part in promoting financial stability. Instead, both that record and theoretical inquiries concerning how free banking arrangements regulate the money supply suggest that central banks, far from being bulwarks of financial stability, are inherently destabilizing. In particular, a free banking reform might have proven far more effective than the Federal Reserve Act in preventing U.S. financial crises.
Central Banks Create Instability
Why central banks, far from being bulwarks of financial stability, are inherently destabilizing.
Intellectually “chew” the ideas brought up in the tour by exploring the Capitalism FAQ (Frequently Asked Questions).