Government Interference, Fiat Money, and Fractional-Reserve Banking

Brian P. Simpson

Chapter 4 in Money, Banking, and the Business Cycle, 2014, pp 113-150 from Palgrave Macmillan

Abstract: Abstract Fiat money and fractional-reserve banking play primary roles today in causing the business cycle. Fiat money has not always played a role, since it has not always existed. However, fractional reserves existed early in banking history and have virtually always played a role in causing the business cycle. Debasing and clipping commodity money have contributed to episodes of the cycle in the past as well (and perhaps have even been the sole cause in some cases). However, their causal role has been minor when considering the overall history of money and banking. The main causes have been fiat money and fractional-reserve banking, especially the latter.

Keywords: Business Cycle; Free Market; Money Supply; Money Demand; Credit Expansion (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-33656-9_5

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DOI: 10.1057/9781137336569_5

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