Value of the U.S. Dollar Over Time

Rob Viglione
Seeking Alpha
March 9, 2009

"The U.S. dollar has lost 97.8% of its value since the creation of the Federal Reserve: In 1913--the year of the creation of the Federal Reserve--one ounce of gold could be purchased for $20.67, whereas now it costs $939.2 (spot price, as of 3/8/09)."

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Library Topic: What is Money?

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Commentary or Blog Post

"The conventional wisdom that nearly infinite demand exists for U.S. Treasury debt is flawed and especially dangerous at a time of record U.S. sovereign debt issuance.

The recently released Federal Reserve Flow of Funds report for all of 2011 reveals that Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations. Last year the Fed purchased a stunning...

"Long ago I quit criticizing the Federal Reserve chairman for failing to avert the latest systemic financial disaster, though I still pity him for enduring the endless Socratic essays, polemics, and indignant soliloquies of his detractors. Criticizing the Fed chairman for a lack of prescience is like criticizing a dog for an inability to recite the alphabet. When something is physiologically...

"Since it was introduced in February, Representative Ron Paul's 'Audit the Fed' bill (H.R. 1207) has gained 282 congressional cosponsors. If adopted, the bill would allow the Government Accountability Office to review, not only the Federal Reserve's balance sheet, but its recent monetary policy deliberations and transactions.

Fed...

"Supplying money, Hayek argued from 1976 until his death in 1992, is best left to private banks competing against each other for deposits. Entrusting government with monopoly control over the single most important good in a market economy -- money -- is a recipe for catastrophe."

"Charles Evans, president of the Federal Reserve Bank of Chicago, called for the Fed to do more to charge up the economy, including a new program of U.S. Treasury bond purchases and possibly a declaration that it wants inflation to rise for a time beyond its informal 2% target."

"The Federal Reserve's blowout 2009 profit is no reason to cheer. Rather, it is a reminder of the dangers inherent in the extraordinary policies the central bank has pursued during the credit crunch.

Last year, the Fed earned $52.1 billion, with most of that income coming from interest-payments on bonds that it bought during the...

"The compensation policies of the Federal Reserve System also deserve scrutiny. ...In recent years, the average wage in the Fed’s regional banks has soared, reaching $84,054 in 2009, or 67 percent greater than the private sector average wage of $50,462. Meanwhile, the average wage of the 2,100 workers in the Fed’s Board of Governors in Washington reached $116,030...

"Wall Street firms aren't the only banks that had a banner year. The Federal Reserve made record profits in 2009, as its unconventional efforts to prop up the economy created a windfall for the government.

The Fed will return about $45 billion to the U.S. Treasury for 2009, according to calculations by The Washington Post...

"On Thursday, the Fed released transcripts of its meetings in 2006, offering a new window into what was on the minds of some of the nation’s top economic and financial thinkers just ahead of the financial crisis and subsequent great recession. The transcripts, which are customarily released after five years, show that Fed leaders, armed with the best economic data available, had little idea of...

"The inflation report released by the government on Tuesday showed that the Consumer Price Index was 3 percent lower last month than it had been three months earlier. It was the steepest such drop since 1933. ...

So amid all the legitimate worries about deflation, it’s worth considering what may be the one silver lining in the...

"In February 1791, the First Bank of the United States (1791-1811) received a unique national charter for twenty years. Alexander Hamilton's brainchild, a semi-public national bank, was a crucial component in the building of the early U.S. economy. The Bank prospered for twenty years and performed traditional banking functions in exemplary fashion. With a main...

"The American people have not seen widespread bank runs since 1933. In that object at least, the Federal Deposit Insurance Corporation has succeeded. But at what cost? To insure deposits is to invite bad banking—and worse; it is to foster reckless speculation and unsound investments, help make inflation permanent instead of intermittent, obstruct the curative...

"I think we're all aware of the stock crisis that's been exploding this week — all thanks to that pesky little problem called the housing market.

It was also announced this week that the Federal Reserve would bail out AIG, and I heard on NPR this morning that they're considering doing more. So that got me thinking: Just how many...

"Everywhere you turn in the financial media lately, you hear people talking about 'quantitative easing.'

It's one of the more impressive financial phrases out there — impressive for the distance between how boring it sounds and how dramatic it actually is.

It means creating massive amounts of...

"At its November meeting the Federal Open Market Committee (FOMC) decided to engage in a second round of quantitative easing called QE2 (i.e., quantitative easing in the form of large-scale purchases of U.S. Treasury securities) by purchasing an additional $600 billion in longer-term government securities by the end of the second quarter of 2011. In a recent...

"Robert Samuelson recently described the current economic upheaval as 'the crisis of the old order,' a collapse of the economic dogmas and institutions of the past few decades. I was particularly struck by one of the items he lists as the pillars of the old order, 'faith in routine economic expansion.' Except that this doesn't describe what he's really talking about. What he's actually talking...

"The Federal Reserve seems determined to make mistakes. First it started rumors that it would resume Treasury bond purchases, with the amount as high as $1 trillion. It seems all but certain this will happen once the midterm election passes.

Then the press reported rumors about plans to raise the inflation target to 4% or higher...

"The Fed is currently embarked on a massive government bond-buying program ($600 billion) aimed at lowering long-term interest rates. The program has met with almost universal criticism from economists and world financial leaders. The reason for that criticism is...

"In 2003, while the United States was at the end of another boom and bust cycle following the bursting of the 'dot.com' bubble and the Y2K scare, there were many monetary central planners at the Federal Reserve and the European Central Bank who were expressing fears about the danger of "deflation" and the supposed perils it could create for the economies of the...

"Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,...

"With the recent rate hike, the mainstream press obediently parrots the macroeconomic analysis offered by our friendly central planners at the Federal Reserve. The average citizen knows that he or she is not nearly smart enough to understand the complex interrelationships of various price indices, yield curves, consumer confidence, and so forth—that’s Greenspan’s...

"There is an ongoing three way debate between those who believe the Fed should do more to strengthen the recovery, those who believe that the recovery is strong enough to continue on its own, and those who believe that the economy has been so fundamentally altered by the recession that no amount of stimulus can succeed in pushing unemployment down to pre-crash levels. As usual, they all have...

"[T]the value of the dollar remained extremely stable for 150 years, then The Fed was created in order to 'stabilize the value of the dollar' and the result has been a 95% devaluation of the dollar in less than 100 years following its creation."

"Why do nations have central banks? Countries have developed without one, and sophisticated financial systems have evolved in their absence. Some countries with a central bank have suffered for having one."

Chart or Graph

The chart compares average wages of workers in the U.S. private sector and workers in the 12 Federal Reserve Banks. In recent years, the average wage in the Fed’s regional banks has soared, reaching $84,054 in 2009, or 67 percent greater than the private sector average wage of $50,462.

This chart shows a ranking of the biggest U.S. financial institutions in light of Fed organized bailouts during the height of the financial crisis in 2008.

"The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services."

The inflation report released by the government on Tuesday showed that the Consumer Price Index was 3 percent lower last month than it had been three months earlier. It was the steepest such drop since 1933.

This chart shows the Effective Federal Funds Rate (FEDFUNDS)--the interest rate banks charge to other banks for lending them money--from 1954 to 2010.

The Federal Reserve and Treasury Total Money Supply has exploded by hyperinflationary levels during the recent years.

The Fed will return about $45 billion to the U.S. Treasury for 2009, according to calculations by The Washington Post based on public documents. That reflects the highest earnings in the 96-year history of the central bank. The Fed, unlike most government agencies, funds itself from its own operations and returns its profits to the Treasury.

"Each year, pursuant to its policy, the Federal Reserve Board remits the Federal Reserve System’s 'excess earnings' to Treasury."

"As the nearby chart shows, foreign purchases of U.S. Treasury debt plunged to 1.9% of GDP in 2011 from nearly 6% of GDP in 2009."

This chart shows the decline in 10-year and 3-month treasury interest rates from 1985 to 2010.

This chart shows the amount of money pumped into the world's financial system by the Fed in collaboration with other central banks during the financial crisis in 2008.

This chart shows the monthly total borrowed by the government from the Fed from 1989 to 2008 in light of several bailout efforts.

"Figure 6-1 shows the evolution of the Federal Reserve’s balance sheet."

Between late 2007 and early 2009, the Federal Reserve Board created more than a dozen new emergency programs to stabilize financial markets and provided financial assistance to avert the failures of a few individual institutions.

"[T]he value of the dollar remained extremely stable for 150 years, then The Fed was created in order to 'stabilize the value of the dollar' and the result has been a 95% devaluation of the dollar in less than 100 years following its creation."

Here is the annual percent change of inflation (CPI) in the Untied States from 1774 to 2007, which I graphed in my previous post, but this time I added historical events to the graph: Wars, Banking Panics, Pegging Paper Money to the Gold and Silver Standard, Establishment of the Federal Reserve and the US Mint.

The U.S. dollar has lost 97.8% of its value since the creation of the Federal Reserve: In 1913--the year of the creation of the Federal Reserve--one ounce of gold could be purchased for $20.67, whereas now it costs $939.2 (spot price, as of 3/8/09).

A 1912 cartoon showing Alfred Owen Crozier's belief of what a central bank would do to the United States.

Analysis Report White Paper

This essay provides a concise overview of central banking history in the United States, in particular covering events before and leading up to the establishment of the Federal Reserve.

"This pocket guide, co-published by Atlas and FreedomWorks, offers a concise, powerful introduction to Sound Money principles."

"Writing in 1912 about the Aldrich plan for a National Reserve Association, Meyer Jacobstein, assistant professor of economics at the University of North Dakota, encouraged North Dakota's bankers, however unsuccessfully, to leave their rural prejudices behind and consider the greater good of the entire banking industry...."

"In this paper, I examine the Federal Reserve’s conventional and unconventional responses to the financial crisis of 2007-2008."

Several monetary institutions appeared in the United States prior to the formation of the Federal Reserve System, or Fed. These were, in order: the constitutional gold (and bimetallic) standard, the First and Second Banks of the United States, the Independent Treasury, the National Banking System, clearinghouse associations, and the National Reserve Association. The Fed was the last such institution founded.

"Following the Revolutionary War, the newly formed nation of the United States sought a way to re-establish commerce, repay war debt, restore the value of currency, and lower inflation…. Alexander Hamilton, the first Secretary of the Treasury — devised a plan to accomplish these goals. His idea? Create a national bank...."

This paper provides a reassessment and a restatement of the essential properties of gold standards. Second, it emphasizes the role of the Real Bills Doctrine in Federal Reserve policy as the primary cause of the Great Contraction of 1929-1933.

"The financial collapse of Fannie Mae and Freddie Mac in 2008 led to one of the most sweeping government interventions in private financial markets in history. The bailout has already cost American taxpayers close to $150 billion, and substantially more will be needed."

As the one-hundredth anniversary of the 1913 Federal Reserve Act approaches, we assess whether the nation's experiment with the Federal Reserve has been a success or a failure.

"Government central banks never have been efficient. It is interesting to ask, though, whether information-age technologies are increasing the advantages of private monetary institutions. In several respects they probably are."

"This paper examines the links between monetary systems and the rule of law in three environments: with commodity money, in a dollarized economy and under a fiat currency. Commodity money best upholds citizens’ rights to their private property, while fiat money poorly secures freedom."

"Yet despite its tremendous importance, the Fed remains a mysterious entity for most people, including policymakers. In this paper I hope to pierce the fog by applying basic economic principles to this intimidating topic."

At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits.

"Writing in 1957, Bray Hammond, in his now standard Banks and Politics in America: from the Revolution to the Civil War, described the second Bank as a noble predecessor for the Federal Reserve. Contemporary hard-money critics saw the bank in a different light."

"Milton Friedman’s and Anna Schwartz’s epic account of the Great Contraction (1929–33) in their Monetary History tells most of what happened (Friedman and Schwartz 1963: chap. 7). It is empirical and analytic economics at its best. Anyone who followed in their footsteps has had this superb model of economic research to guide his own efforts."

So it is with the Federal Reserve. Mischievous by its very nature, it rarely does the very same thing twice. Fed-watchers, always looking for a precise pattern in monetary aggregates, hoping to get an exact fix on the Federal Reserve's modus operandi, are almost sure to be disappointed.

The Kydland-Prescott, Barro-Gordon inflation bias result hinges on policymakers aiming at employment above potential. We show that even if policymakers target the normal level of employment, a bias arises if they are uncertain about economic conditions and are more sensitive to employment below than above normal.

"In his talk Burns offered little hope for an escape from secular inflation. Current worldwide philosophical and political trends, Burns diagnosed, will continue to undermine wealth creation and strangle incentives. These modern trends produce permanent budget deficits and have introduced 'a strong inflationary bias' into the economy."

"The Federal Reserve Act of December 23, 1913 was part and parcel of the wave of Progressive legislation, on local, state, and federal levels of government, that began about 1900."

Video/Podcast/Media

Salerno discusses the history of economists' thinking on central banking.

Hummel defends the proposition that libertarians should endorse fractional reserve banking for its economic benefits, and that the gold standard is actually more restrictive to liberty.

"George Selgin, of the University of Georgia, talks with EconTalk host Russ Roberts about whether the creation of the Federal Reserve in 1913 has been a boon or a bust for the U.S. economy. Drawing on a recent paper with William Lastrapes and Lawrence White recently released by the Cato Institute, "Has the Fed Been a Failure?" Selgin argues that the Fed has done...

"Rep. Ron Paul sponsored this Congressional lecture on 'What is Constitutional Money?', part two of a three part series on the basic principles of money for Congressional staff. As a continuing educational tool this lecture was filmed and is provided to the public. The lecture was delivered by Edwin Vieira, Jr., J.D., Ph.D, the author of the definitive work on Constitutional money, Pieces of...

"Rep. Ron Paul sponsored this Congressional lecture on 'What is Money?', part one of a three part series on the basic principles of money for Congressional staff. As a continuing educational tool this lecture was filmed and is provided to the public. Joseph T. Salerno, Ph.D., delivered the lecture. He is academic vice president of the Mises Institute, professor of economics at Pace University...

"Former Federal Reserve Chairman Alan Greenspan was the lead witness at the first of three days of hearings by the bipartisan Financial Crisis Inquiry Commission (FCIC). Mr. Greenspan talked about what led up to the financial crisis in the housing markets and reminded the commission of his warning in 2004 to the Senate Banking Committee about sub prime mortgage...

"Former Federal Reserve Chairman Alan Greenspan was the lead witness at the first of three days of hearings by the bipartisan Financial Crisis Inquiry Commission (FCIC). Mr. Greenspan talked about what led up to the financial crisis in the housing markets and reminded the commission of his warning in 2004 to the Senate Banking Committee about sub prime mortgage...

The interview covers Greenspan's Fed chairmanship, his role in the financial crisis, his relationship to various presidents, and his economic predictions for the future.

In this interview, Fed Chairman Bernanke predicts the recession to end in 2009, discusses the role of the Federal Reserve, and defends his actions to address the financial crisis and promote recovery.

Ben Bernanke, Alan Greenspan and Gerald Corrigan discussed the purpose of the Federal Reserve and its role in economic crises, including the 2008 recession.

"This is a high quality version of the Financial Services Subcommittee on Oversight and Investigations hearing of May 5, 2009.

Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by...

"In our second debate, Douglas Holtz-Eakin, former chief economic policy adviser to Senator John McCain's 2008 presidential campaign, delivers a critique of the Federal Reserve's second round of quantitative easing, and John H. Makin, resident scholar in economics...

"The recent financial crisis has led to a massive expansion of government involvement in our capital markets. Foremost among those interventions has been the almost tripling of the Federal Reserve's balance sheet, from just over $800 billion before the crisis to almost $2.3 trillion now. Even more astounding is that the increase, with its massive exposure of loss...

"The Federal Reserve's contribution to the current financial crisis, far from being exceptional, is typical of central banks' frequent, myopic mismanagement of money. So why, given their dismal record, do we allow governments to manage money at all? The standard answer is that were money left to private enterprise, bad money would drive good money out of...

"Cato's 28th Annual Monetary Conference — Asset Bubbles and Monetary Policy — will address a key issue underlying the 2008 financial crisis: Did the Federal Reserve contribute to the crisis by keeping interest rates too low for too long? Would a more restrictive monetary policy have prevented the asset price bubble in housing? Leading experts will...

"A debate was held on the usefulness of the Federal Reserve in light of the recent economic downturn. Participating in the debate were Warren Coats and John Fund, who defended reforming the Federal Reserve, vs. Gene Epstein and Thomas Woods, who argued for abolishing it. Joe Bradley moderated the debate... ."

Professor Horwitz discusses the history of banking in the United States, along the way dispelling the notion that banking had never been unregulated and other myths, and describes how the idea of a central bank and federal reserve system emerged. Evaluating the Fed, Horwitz argues that it has expanded its powers unduly, caused inflation and contributed to...

"Fed Chairman Ben Bernanke discusses pressing economic issues, including unemployment, the deficit and the Fed's controversial $600 billion U.S. Treasury Bill purchase. Scott Pelley reports."

"Economists and investors advocated abolishing the Federal Reserve system and talked about alternatives to the Federal Reserve. They talked about the role of government in shaping fiscal and monetary policy, financial market regulation, and the gold standard. They also responded to questions from the audience."

"Former BB&T Chairman and CEO John A. Allison discusses how mandates like Sarbanes Oxley and the Patriot Act helped cause the housing meltdown and financial crisis. He spoke at the Cato Institute's 29th Annual Monetary Conference held November 16th, 2011."

"Witnesses testified about proposals to expand the role and authority of the Federal Reserve. The new powers would give the Federal Reserve responsibility for identifying systemic risks and regulating large financial institutions. Several members and witnesses expressed concerns that the new powers might be detrimental, especially since the Federal Reserve...

According to investment strategist Jeremy Grantham, "the Fed is not designed to have effective tools to deal with the economy. It should settle for just controlling the money supply." Among other things, Grantham discusses the Fed's relationship with unemployment and the housing market, and then suggests that the Fed is manipulating the markets.

"Thomas Jefferson and Andrew Jackson understood 'The Monster'. But to most Americans today, Federal Reserve is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and...

Created by Omid Malekan, this cartoon humorously explains the Federal Reserve policy of quantitative easing.

"James Grant, Grant's Interest Rate Observer, explains why he thinks the Federal Reserve's new bond-buying program will do more harm than good, saying the U.S. Treasury should begin to issue longer-dated bonds back by gold, with CNBC's Kelly Evans."

"A speech by Murray N. Rothbard. Presented at the Mises Institute's 1984 'Seminar on Money and Government,' in Houston, Texas." Rothbard makes special note of the role bankers played in lobbying for and establishing the Fed.

"The Federal Reserve has existed for almost 100 years and it has created depressions, recessions, inflation, and bubbles. This CF&P Foundation video explains the origin of central banking and mentions possible alternatives that will be discussed in subsequent mini-documentaries."

Primary Document

"The Foreign Operations Act (P.L. 102-391) signed on October 6, 1992 allows the U.S. quota, or contribution, increase to the IMF of $12 billion to be used to '..support monetary stability in member countries through the instrumentality of currency boards.' What is a currency board? How does it differ from an alternative monetary arrangement such as a central bank?...

"In a complete revision of the standard account, Rothbard traces inflations, banking panics, and money meltdowns from the Colonial Period through the mid-20th century to show how government's systematic war on sound money is the hidden force behind nearly all major economic calamities in American history. Never has the story of money and banking...

According to the FDIC, this piece of legislation "[r]equired Federal Reserve Board approval for the establishment of a bank holding company." The law also "[p]rohibited bank holding companies headquartered in one state from acquiring a bank in another state."

The official text of the original Constitution.

This is a collection of publications by the National Monetary Commission, which was established by the Aldrich-Vreeland Act in 1908 after the Panic of 1907. The Commission was charged with investigating the history of banking systems around the world. Its reports formed the basis for the Federal Reserve Act of 1913, which created the Federal Reserve.

"The Federal Open Market Committee (FOMC) consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of...

"An Act To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes."

The most current version of the Act is available at the Federal Reserve's...

"The Dodd-Frank Wall Street Reform and Consumer Protection Act directed GAO to conduct a one-time audit of the emergency loan programs and other assistance authorized by the Board of Governors of the Federal Reserve System (Federal Reserve Board) during the recent financial crisis. This report examines the emergency actions taken by the Federal Reserve Board from December 1, 2007, through July...

Federal Reserve Chairman Ben Bernanke provided his semiannual monetary policy report and discussed the financial markets and the general state of the economy in the wake of the continuing financial crisis.

The National Monetary Commission was established by the Aldrich-Vreeland Act in 1908 in response to the panic of 1907. It was charged with investigating banking systems around the world. This report includes a proposed bill for the formation of a central banking system in the United States and formed the basis for the the Federal Reserve Act of 1913.

"To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes."

"To abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes."

Hamilton's reasoning for the creation of a national bank is that it falls under the implied powers of Congress and would better the country for the American people.

"In my remarks this morning, I will begin with some observations about recent market developments and their economic implications.  I will then try to place recent events in a broader historical context by discussing the evolution of housing markets and housing finance in the United States.  In particular, I will argue that, over the years, institutional...

Jefferson argues against the creation of a national bank on the grounds that it is not one of the delegated powers given to Congress under the Constitution.

"When Walter Bagehot wrote Lombard Street: A Description of the Money Market, in 1873, he did the unthinkable: In language as fresh and clear today as it was over 100 years ago, he respectfully dissected the Bank of England's foundations, economic incentives, goals, and functions. In the process, he illuminated in a mere few hundred...

According to its opening lines, this document was created "to provide a National Currency, secured by a pledge of United States Bonds, and to provide for the circulation and redemption thereof." The...

"Paul Warburg was an advocate for a central bank in the United States and was chosen by President Woodrow Wilson to serve as one of the first members of the Federal Reserve Board."

Andrew Jackson's message to the Senate giving his reasons for his executive veto of the Act to reinstate the Bank of the United States--namely that Jackson thought the bank to be unconstitutional.

"Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is...

"Mr. Chairman, Senator Sarbanes, and Members of the Committee, thank you for again inviting me to discuss the role of housing-related government-sponsored enterprises (GSEs) in our economy. As I described at length last year, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (hereafter Fannie and Freddie) have contributed...

"Appropriately, the problem of too-big-to-fail, and the policies that the government uses to address that problem, will be a particular focus of your forthcoming report and in the hearing today. In my view, the too-big-to fail issue can best be understood in the broader context of the financial crisis itself. Accordingly, this testimony provides an overview of the...

"Good afternoon. One of a President's most important appointments is Chairman of the Federal Reserve. In our economy, the Fed is the independent body responsible for setting monetary policy, for overseeing the integrity of our banking system, for containing the risk that can arise in financial markets, and for ensuring a functioning payment system. Across the world...

"The bankruptcy of Lehman Brothers in September 2008 precipitated what, in retrospect, is likely to be judged the most virulent global financial crisis ever. To be sure, the contraction in economic activity that followed in its wake has fallen far short of the depression of the 1930s. But the virtual withdrawal, on so global a scale, of private short term credit,...

By Robert L. Owen, a United States Senator and one of the primary sponsors of the 1913 Federal Reserve Act, this book gives a history of the Act and the reasoning behind it, promoting the idea that the Federal Reserve Act had been sucessful thus far.

A compilation of legislative and other documents pertaining to the establishment of the Federal Reserve Act of 1913.

"The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general...

"In partnership with the Federal Reserve Bank of Philadelphia, the Federal Reserve Bank of St. Louis presents this digital collection of the original documents related to the formation of the First (1791-1811) and Second (1816-1836) Banks of the United States. This collection includes hearings before the House and the Senate, with arguments both in favor of and...

"Vera Smith's The Rationale of Central Banking invites us to reassess our monetary institutions and give reform proposals due consideration. The decades since it first appeared in 1936 have restored its themes to relevance. Government-dominated monetary systems have continued to perform poorly. Other experience, as well as the work of James Buchanan and...

"In 1912, when Mises, at age thirty-one, wrote this landmark book, no monetary theory could be described as both securely founded on economic reality and properly incorporated into an analysis of the entire economic system. The Theory of Money and Credit opened new vistas. It integrated monetary theory into the main body of economic analysis for the first time, providing fresh new insights...

"Most political writers have concluded, that a republican government, over a very large territory, cannot exist; and as this opinion is sustained by alarming proofs, and weighty authorities, it is entitled to much respect, and serious consideration. All extensive territories in past times, and all in the present age, except those of the United States, have been, or...

"The New York Chamber of Commerce is conceded to be the confederated brains of all the great interests of Wall Street. It was founded April 5, 1768. It is dominated by the masters of high finance and is the official voice of Wall Street on governmental action and financial policies. Frank A. Vanderlip, president of Standard Oil's National City Bank, and others comprised the 'Special Currency...

"Lehman’s demise was caused by uncontrollable market forces and the incorrect perception and accompanying rumors that Lehman did not have sufficient capital to support its investments. All of this resulted in a loss of confidence, which then undermined the firm’s strength and soundness. Those same forces threatened the stability of other banks -- not just Lehman....

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