Episode 18 - Economics 101 - 7 of 8 - Banking and the Business Cycle - Murray N Rothbard

ECONOMICS 101 Murray Rothbard's Economics 101 series 7. Banking and the Business Cycle One of the most difficult things to understand about banking is how money is created out of thin air. Current commercial bank liabilities are immediate. The banks do not have the reserves to redeem all demand notes. Thus, banks are inherently insolvent. But, government has eliminated runs on banks. Banks are not allowed to fail when they are mismanaged. Central banks are sold to the public as restraining inflation, but central banking was created to allow inflation. The inflationary process generates the boom and bust business cycle. The Bank of England was a great racket. The public accepted new money that was created out of thin air. The King had given the Bank a monopoly on money creation. President Jackson tried to get rid of the US central banks. Banks created the Federal Reserve System in 1913. The Fed banks now have a monopoly on all paper money. By legal tender law, one must accept Federal Reserve Notes. The Federal Reserve manipulates the money supply by manipulating the Federal reserves. The Central Bank is a lender of last resort. Every bank will be bailed out. Economists were mainly concerned about the crashes, not the booms, of business cycles. Mises understood that the banks were inherently inflationary. He understood that the expanded money supply was going to commercial banks to loan to longer-term production projects like construction. This credit expansion was not based upon consumers having saved anything. The boom was a bad distortion. It promoted malinvestment. The crash was inevitable and a good thing. Austrians would stop inflating. Austrians during the crash would keep government hands off. 1920 was a great example of this Austrian Theory of the Business Cycle at work. The seventh of eight sessions from Murray Rothbard's Economics 101 series. A collection of eight speeches and lectures by Murray N. Rothbard, spanning from the 1970s to the early 1990s. He is speaking in a small classroom setting, explaining economics from the ground up, and systematically in the manner of a classic 101 course on the topic—but with a revolutionary approach. This lecture on YouTube: https://youtu.be/DnJRnJU9WNU Sourced from: https://mises.org/library/economics-101 We are not endorsed or affiliated with the above. https://creativecommons.org/licenses/by-nc-nd/3.0/legalcode Presented by Read Rothbard: Read Rothbard is comprised of a small group of voluntaryists who are fans of Murray N. Rothbard. We curate content on the www.ReadRothbard.com site including books, lectures, articles, speeches, and we make a weekly podcast based on his free-market approach to economics. Our focus is on education and how advancement in technology improves the living standards of the average person. The Read Rothbard Podcast is all about Maximum Freedom. We look at movies and current events from a Rothbardian Anarchist perspective. If it's voluntary, we're cool with it. If it's not, then it violated the Non-Aggression Principle and Property Rights - the core tenants of Libertarian Theory - and hence - human freedom. Website: http://www.ReadRothbard.com iTunes: https://itunes.apple.com/us/podcast/the-read-rothbard-podcast/id1166745868 Google Play Music: https://play.google.com/music/m/Ii45fhytlsiwkw6cbgzbxi6ahmi?t=The_Read_Rothbard_Podcast Facebook: http://www.facebook.com/readrothbardclub Flickr: https://www.flickr.com/gp/145447582@N05/xB4583 Patreon: https://www.patreon.com/ReadRothbard Murray Rothbard, Murray N Rothbard, Read Rothbard, Anarchy, Anarchism, Free-Market, Anarcho-Capitalism, News and Events, Podcast, Laissez-Faire, Voluntaryist, Voluntaryism, Non-Aggression Principle, NAP, Libertarian, Libertarianism, Economics, Austrian Economics, Austrian Economics Overview, Capital and Interest Theory, Prices, Value and Exchange, Economics 101, Microeconomics, Supply and Demand,