Paper Money Collapse: The Folly of Elastic Money, 2nd Edition

Epilogue Money, Freedom, and Capitalism

One of the worrying consequences of the recent financial crisis has been the growing acceptance of all sorts of state intervention in the economy. The public predominantly believes that the reckless lending that caused the crisis must be due to the moral failings of bankers, and does not appreciate that reckless lending is no bug but a feature of our fiat money system. State and bankers are accomplices in the money-printing business, and while many bankers surely were greedy, irresponsible, and stupid, they operated within a statesponsored support structure that systematically rewarded debt and risk, and that socialized the downside, and they conducted their partially reckless lending with the steady support and occasional encouragement of the state central banks. Yet in the public’s perception, mainly the bankers are to blame, and by extension the free market. Meanwhile, the central bankers have saved the system, or at least prevented another Great Depression, and the state has now valiantly accepted the task of regulating banking “properly.”

It is maybe a good indicator of the underlying climate that proposals to impose 100-percent reserve requirements on the private banks and to hand full control over the money supply to the central banks, seem to be enjoying a revival in many countries. Proposals of that kind are being promoted in the United States,¹ the United Kingdom,² Germany, and Switzerland at present. The theories, ideas, and ...