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The Characteristics and Effects of a Free Market in Money and Banking

In: Money, Banking, and the Business Cycle

Author

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  • Brian P. Simpson

Abstract

This chapter shows that a free monetary and banking system means absolutely no government interference in money and banking. It discusses what is meant by “no government interference.” Such a system is unprecedented in history, except for possibly the very first banks in ancient Greece or fourteenth-century Italy. From the very beginning, or very shortly thereafter, governments interfered in monetary and banking systems to gain advantage for themselves and those they wanted to favor. This interference existed in the form of minting coins, debasing the currency, allowing banks to suspend payment when payment was contractually required on demand, raiding bank vaults, and so on. A free market in money and banking will lead to a level of stability in the economy that will make the economic system seem boring compared to today, since it will virtually eliminate monetary induced financial crises, recessions, and depressions. Developments in the economy will still be exciting; however, the excitement will be confined to rapid rates of economic progress; innovations in products and methods of production; the development of new technologies; the exploration of space and the colonization of moons, planets and other solar systems by private individuals; and a rapidly rising standard of living.

Suggested Citation

  • Brian P. Simpson, 2014. "The Characteristics and Effects of a Free Market in Money and Banking," Palgrave Macmillan Books, in: Money, Banking, and the Business Cycle, chapter 5, pages 151-185, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-33656-9_6
    DOI: 10.1057/9781137336569_6
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