Mystery of Banking

I finished reading Murray Rothbard's illustrative primer on our modern banking system last night. (available for free download from here) The final chapter deals with the era of the Federal Reserve, since 1913.

The book was only written in 1983, yet it is more relevant than ever. Here is a paragraph that really left me wondering about where we are today.

"The Fed tried frantically to inflate after the 1929 crash, including massive open market purchases and heavy loans to banks. These attempts succeeded in driving interest rates down, but they foundered on the rock of massive distrust of the banks. Furthermore, bank fears of runs as well as bankruptcies by their borrowers led them to pile up excess reserves in a manner not seen before or since the 1930s.”

Oh yeah ! We're witnessing it right now.

I wish Rothbard were around today to tell us what he thinks of this mess.

He would definitely be drawing parallels between the efforts of the Fed, Hoover and Roosevelt and today's efforts.