The present financial crisis shows how central banks can fuel the financial booms that make severe busts possible. Unfortunately, theoretical discussions of central banking badly neglect its role in fostering financial instability, in part because they ignore its history and political origins.
Central Banks as Sources of Financial Instability
By George A. Selgin
This
article
appeared in
the Spring 2010 issue of The Independent Review.
Other Independent Review articles by George A. Selgin | |
Fall 2013 | The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economys Only Hope |
Summer 2011 | They Stumble Who Run Fast: Roubini and Mihms Crisis Economics |
Summer 2000 | Should We Let Banks Create Money? |