Tuesday, August 05, 2014

Government Regulation Causes Banking Crises : America's Banking System Was Much More Stable Without A Central Bank

Princeton University Press has released the myth breaking blockbuster from Professor Charles W. Calomiris and Professor Stephen H. Haber:
Why are banking systems unstable in so many countries--but not in others? The United States has had twelve systemic banking crises since 1840, while Canada has had none. The banking systems of Mexico and Brazil have not only been crisis prone but have provided miniscule amounts of credit to business enterprises and households. Analyzing the political and banking history of the United Kingdom, the United States, Canada, Mexico, and Brazil through several centuries, Fragile by Design demonstrates that chronic banking crises and scarce credit are not accidents due to unforeseen circumstances. Rather, these fluctuations result from the complex bargains made between politicians, bankers, bank shareholders, depositors, debtors, and taxpayers. The well-being of banking systems depends on the abilities of political institutions to balance and limit how coalitions of these various groups influence government regulations.

Fragile by Design is a revealing exploration of the ways that politics inevitably intrudes into bank regulation. Charles Calomiris and Stephen Haber combine political history and economics to examine how coalitions of politicians, bankers, and other interest groups form, why some endure while others are undermined, and how they generate policies that determine who gets to be a banker, who has access to credit, and who pays for bank bailouts and rescues.
Listen to this interview between Professor Charles Calomiris and historian Tom Woods. Professor Charles Calmiris explains that the Fed , FDIC deposit insurance, Fannie , and Freddie have made the banking system much more unstable than the world of banking in America before 1914. We assure you that you will not regret buying this book. It shreds the outright lies and myths about American history that your typical socialist teacher has been telling you.