The Problem of Saving

When Schumpeter writes, “Now to the question: what is a savings account?”,[1] he is not being facetious. There is more to savings than meets the eye. Of course, the bare fact of saving is simple enough to understand. Rather than spend all of our earnings, we take some and put it to one side. What … Continue reading “The Problem of Saving”

An End to Alchemy?

Michael Lewis, the author of various illuminating accounts of the events and progressions of the great financial crisis of 2008 – one of which became an Oscar-winning Hollywood movie – this time provides us with an illuminating account of someone else’s book – Mervyn King’s newly published The End of Alchemy. The thesis is a … Continue reading “An End to Alchemy?”

Isaac Newton and the Alchemy of Finance

Western Christendom experienced a sea change in the late 17th century. On one side of that divide was theological dogmatics, scholastic philosophy, the divine right of kings and priests, and, seemingly in their train, wars of religion; on the other side, there was theological indifference, mechanical philosophy, government by consent of the governed, latitudinarian and … Continue reading “Isaac Newton and the Alchemy of Finance”

Why We Do NOT Have a Fractional-Reserve System

This blog entry is for anyone who believes, as John Tamny here puts it, that “Fractional reserve banking quite simple IS.” Among the many good points Tamny makes in his article, there is the underlying assumption that our system is, in some important sense, a fractional-reserve system. But is this a valid contention? My contention … Continue reading “Why We Do NOT Have a Fractional-Reserve System”

Private Issue of Money — the Root of Our Monetary Problem?

In a comment posted under an article by my friend Jerry Bowyer (Where’s the Hyperinflation?), “ps61penn62prin64” writes that “private currency monetary systems… are doomed to fail the interest of American citizens.” Bowyer’s article discusses the sizeable increase in the money supply generated by the Fed, and how this has — or has not — affected … Continue reading “Private Issue of Money — the Root of Our Monetary Problem?”

Jimmy Stewart Banking versus James Steuart Banking

In his excellent book The New Lombard Street, Perry Mehrling writes of “a world that never was … Jimmy Stewart banking of blessed memory” (p. 117). This is an obvious  reference to one of Jimmy Stewart’s most famous roles: George Bailey in the holiday classic movie It’s a Wonderful Life. In the movie, Bailey is … Continue reading “Jimmy Stewart Banking versus James Steuart Banking”