It has been said that those who are ignorant of history are doomed to repeat its mistakes. It has become a modern act of faith that economic life could not simply go on without a Central Bank. By stepping into the past, we can observe the treachery, wars, profiteering, and political deception. That has brought us to the present.
Much of what lies ahead will be unpleasant.
In 1910, the most common cause of a bank having to declare bankruptcy, was due to a currency drain. It followed a policy that was more reckless than its competitors. There was a practice among some of the reckless banks to "loan up".
Historian John Klein tells us that "The financial panics of 1873, 1884, 1893 and 1907 were in large part an outgrowth of reserve pyramiding,". These panics were triggered by the currency drains that took place in periods of relative prosperity.
Source: The Creature from Jekyll Island
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