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Archive of posts published in the tag: The Fed

Bagehot and the Fed

“The Federal Reserve and other central banks have done the opposite. They take any form of collateral and charge little to no interest, thus prolonging the presence of bloated and ill-managed enterprises, denying savers the benefits of prudence, destroying productivity, and burdening public balance sheets with the debts of functionally dead organizations.”

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The Proper Role of the Central Bank in a Crisis

This “lender of last resort” role for central banks was codified by British journalist and economist Walter Bagehot in his 1873 book, Lombard Street. In a panic, Bagehot advised, a central bank should lend freely on good collateral and charge

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