Modern Money Creation
Central banking and a system of money creation gives modern capitalist nations a measure of control over their economies that would otherwise be impossible. Although the Federal Reserve System and the mechanisms of monetary policy are neither foolproof nor guaranteed to yield the intended results, they are dreams come true compared with the traditional alternatives. These alternatives were to have the health of banks depend on the faith of depositors and the skill and ethics of the bankers and to have the money supply depend on the amount of gold being discovered and mined.
As we will see in the next chapter, monetary policy has compiled a record that’s as mixed as that of fiscal policy.
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