Quote from Pekelo:
Excuse me, did you actually have a point?? Me think not.
When you show me a couple of Western (or any decent sized for that matter) countries operating without a central bank we can talk....
Read American history in the XIX century. There were bank failures left and right. There was a banking crises in every 9 years or so. Know your history...
Once you traveled farer from your city, nobody accepted your money, issued by your bank. Convenience, I say. 
Your argument that "everyone else is doing it" is not sufficient to prove that central banking is the best system to employ. Everyone else was doing a lot of things in history that we now know with certainty were very bad. As society progresses, the mistakes of the past become obvious. One day, central, fractional-reserved, legal-tender banking will be seen for what it is. A sham a scourge a farce.
This country and probably every other country did a lot better economically before the central banks came along and fcked everything up. Growth was higher and inflation was lower. In fact, for the most part there were long, sustained periods of deflation pre 1913. What do you think Bernanke thinks about that? Deflation: something to avoid at all costs? Well, if you have a stable money, then deflation is a natural phenomenon, and really just a side effect of rising productivity.
The fed's mandate is supposed to be maximum employment and growth, and low inflation right? So how can you possibly reconcile that with the fact that employment was higher, economic growth was higher and inflation far lower, (deflation was the rule) in the 1800s vs. the period 1913 to present. If that is the mandate, any rational person would have to conclude that the fed has been an utter failure. I mean let's say government were to start a department against adolescent obesity. It's charter stated that its goals were to lower the rates of obesity in teens, increase their athletic performance and lower instances of diabetes. Ok, so they start the group and it turns out that after kids follow the orders of the group the diet and exercise program, everything to a T, they get unbelievably fatter and can't even run a 100 yard dash - let alone a mile. Oh yeah and almost every one of the kids in the program is on his way to type 2 diabetes by the age of 16. Wouldn't you say that this program has been a total failure! I would and more than that I would say it seems to have caused the opposite of it's stated purpose.
Well, since the fed has been in business, employment and growth have dropped, and inflation has surged to the point that the value of the dollar has almost dropped by 98% since inception. Do you honestly call that a success story?
There were bank failures left and right in the mid 1800s. But many of these banks were frauds. The free market has a very effective way of dealing with fraudsters and that is to put them out of business. Only trusted institutions will get long term repeat business. And I wouldn't call what they were issuing currencies, they were more like IOUs. No name two bit banks IOUs wouldn't be able to be used in the next city, but those from stable, trusted banks would. Murray Rothbard used to talk about Joachin's Thaler, a coin/currency used in Germany hundreds of years ago. It got the reputation for being pure and 'good as gold' so everyone from all over the continent used it because of its pristine reputation.
the free market will almost always arrive at the best solution. Money is no exception. And the free market has time and again chosen gold (and silver) as the best money. If you are transacting in gold and not fractionally reserving, you cannot have a banking crisis.
Nevertheless just because there were more banking crises back then doesn't mean that was a worse system. The way i figure it, if the government hadn't papered over all the problems of the last two years, stock markets would be near zero and nearly every bank, mutual and pension fund would be vaporized. Game over. A banking crisis that is as severe as that is worse than 500 minor ones. Would you rather have a cold for 3 weeks or ebola for one weekend?
The FR system has outstayed its welcome and I suspect that by the time the next bear market is over it will be gone.
any thoughts rearde, GofC?
