Monday, January 18th, 2010
If supporters of free markets are to grapple effectively with the fallout of the late crisis, they need to start by getting one thing clear in their heads: Modern banks, especially the big banks, are not free market institutions. They are agencies of the government.
Creating and maintaining the value of the currency is a core function of government, laid out right in the Constitution (c.f. “and regulate the Value thereof”). In a modern, credit based financial system the mechanism through which dollars are created and their value regulated is the banking system.
