by Sennholz
[Front Matter and Table of Contents]: This segment contains the title page, publication details, and the comprehensive table of contents for 'Bankers and Regulators' edited by Hans F. Sennholz. It outlines the book's three-part structure: the failure of regulation, the progression from crisis to crisis, and the proposed return to sound banking, featuring various authors from the classical liberal tradition. [Introduction: Myths of Banking and Regulation]: Hans F. Sennholz introduces the volume by critiquing the prevailing belief that banking requires government oversight. He identifies and refutes three major myths: that banking is inherently unstable without regulation, that banks naturally charge usurious rates, and that effective economic policy requires state control over money. Sennholz argues that historical instabilities, such as those in the 'Free Banking Era,' were actually caused by state interventions like bond-collateral requirements and unit-banking restrictions. He further explains how usury laws and Regulation Q exacerbated financial crises by preventing market adjustments during inflationary periods. [The Impossible Task of the Fed]: Ernie Ross argues that the Federal Reserve is tasked with contradictory goals—fighting inflation while simultaneously covering government deficits and bailing out failing banks. He contends that these interventions reward malinvestment and create a cycle of 'stagflation' and economic instability. Ross classifies the Fed as an 'economic tyranny' that subjugates private decision-making to state authority. He concludes that the only solution is to abolish the Fed and privatize all monetary functions, including currency issuance and deposit insurance. [On Usury Laws]: William Cullen Bryant critiques usury laws as arbitrary and oppressive price controls on money. He argues that money should be treated as a commodity governed by supply and demand rather than legislative fiat. Bryant asserts that these laws actually harm borrowers by diminishing available capital and failing to account for the varying risks associated with different types of loans and borrowers. He calls for the total repeal of the usury code to allow for a free trade in money. [The International Monetary Fund]: Ken S. Ewert examines the history and impact of the International Monetary Fund (IMF) from its origins at the Bretton Woods Conference. He argues that the IMF facilitates worldwide statist policies by providing a 'safety net' for governments that engage in inflationary spending. Ewert critiques the transition from fixed exchange rates to 'balance of payments' lending and the creation of Special Drawing Rights (SDRs) as a move toward a global fiat currency. He concludes that the IMF has failed in its stated goals and instead serves to coordinate global monetary expansion and subsidize insolvent regimes. [The Savings and Loan Bailout: Valiant Rescue or Hysterical Reaction?]: This segment introduces Hans F. Sennholz's analysis of the Savings and Loan (S&L) crisis and the subsequent government bailout. It serves as the beginning of a deeper investigation into whether the state's response was a necessary rescue or a counterproductive reaction to problems caused by previous regulations. [Introduction: The Failure of Financial Regulation]: Sennholz introduces the 1980s financial disaster as a failure of government-mandated cartels and federal deposit insurance rather than a failure of the free market. He argues that the system's contradictions, exacerbated by inflation and globalization, led to the collapse of over 500 banks and 3,000 thrifts, with taxpayers ultimately underwriting the losses. [Structure and Superstructure: The History of S&Ls]: This section traces the evolution of Savings and Loan associations from voluntary neighborhood partnerships to a highly regulated federal superstructure. Sennholz details how the Hoover and Roosevelt administrations created a financial 'supercartel' through agencies like the FHLBB, FDIC, and FSLIC, which institutionalized the risky practice of borrowing short-term deposits to fund long-term mortgages. [Seeds of Disaster: Cartel Regulation and Maladjustment]: Sennholz analyzes the structural flaws of the regulated banking cartel, noting that it stifled innovation and created massive economic maladjustments. He argues that federal deposit insurance created perverse incentives for reckless management and that government efforts to keep mortgage rates artificially low led to volatile housing cycles and significant overinvestment in real estate. [In the Vise of Regulation and Inflation]: This section examines how the combination of 1970s inflation and rigid interest rate ceilings 'squeezed' S&Ls to death. Sennholz critiques the legislative responses, such as the Garn-St. Germain Act, for encouraging dubious accounting and risky commercial ventures, while the 1986 Tax Reform Act triggered a wave of defaults in the 'Oil Patch' states by removing real estate incentives. [The Bailout Act and the Resolution Trust Corporation]: Sennholz critiques the 1989 Bailout Act, arguing it merely reshuffled regulatory labels while tightening political control. He discusses the creation of the Resolution Trust Corporation (RTC) to manage defunct assets and the Act's social engineering provisions, such as mandated subsidies for low-income housing, which he claims will lead to further corruption and market distortion. [Fighting Mismanagement and Hysterical Penalties]: The author addresses the charges of fraud and mismanagement, arguing that the regulatory system itself invited corruption. He condemns the 'hysterical' civil and criminal penalties introduced in the Reform Act, comparing them unfavorably to state laws for violent crimes, and notes the lack of accountability for the legislators and regulators who designed the failing system. [Conclusion: Housing and Freedom]: Sennholz concludes by calling for the complete dismantling of the financial cartel and the privatization of deposit insurance. He argues that 'better regulation' is an oxymoron and that the only path to stability is to allow a banking industry built on private property and individual freedom to evolve without government interference. [Fractional Reserve versus 100% Reserve Banking]: Morris J. Markovitz attempts to resolve the debate between 100% reserve and fractional reserve banking proponents. He argues that the conflict stems from an 'intellectual package deal' where the warehousing function (safekeeping) and the loan-brokering function (investment) are conflated. By separating these functions legally and eliminating legal tender laws, both systems could coexist in a free market. [The International Debt Crisis]: Ken S. Ewert examines the causes of the 1970s-80s international debt crisis, identifying Federal Reserve inflation and the recycling of petrodollars as primary drivers. He critiques 'development economists' for encouraging statist planning in less developed countries (LDCs), which led to wasted capital, corruption, and capital flight. Ewert warns against 'socializing' these losses through international agencies or monetary inflation. [The Farm Credit Crisis]: E.C. Pasour, Jr. analyzes the crisis in agricultural lending, attributing it to easy credit policies and restrictive banking regulations. He argues that subsidized loans from the FmHA and FCS encouraged over-leveraging and kept inefficient producers in the market. Furthermore, unit-banking laws prevented banks in agricultural regions from diversifying their portfolios, making them uniquely vulnerable to sector-specific downturns. [How to Solve the Debt Crisis]: Christopher L. Culp proposes a market-based solution to the Third World debt crisis. He advocates for the securitization of debt to establish true market values, the use of debt-equity swaps to stimulate local growth and repatriate flight capital, and the privatization of state-owned enterprises. He emphasizes that U.S. banks must be held accountable through market-to-market accounting rather than relying on taxpayer-funded bailouts. [Banking Without the “Too-Big-to-Fail” Doctrine]: Richard M. Salsman critiques the 'too-big-to-fail' doctrine, tracing its origins to the establishment of the Federal Reserve and the 'essentiality doctrine.' He argues that central banking has caused a secular decline in bank safety and that the doctrine encourages insolvency by transforming the lender of last resort into a provider of permanent credit to failed institutions. He advocates for nationwide branching and subjecting banks to standard bankruptcy laws. [Toward a Cashless Society]: Elizabeth Kolar discusses the technological transition toward a cashless society via Electronic Funds Transfer Systems (EFTS). She explores the roles of ATMs, Automated Clearing Houses, and Point of Sale terminals, noting that the elimination of 'float' is a major hurdle for businesses. She suggests that a cashless environment is compatible with free banking, where privatized clearinghouses would manage digital settlements. [Banking Without Regulation]: Lawrence H. White uses historical evidence from the 19th century to argue that unregulated banking is stable and non-inflationary. He debunks the myth of 'wildcat banking' in the U.S., explaining that instability was caused by specific state regulations rather than a lack of them. He highlights how private clearinghouses successfully monitored solvency and liquidity without government oversight. [Time to Abolish the Fed?]: Elgin Groseclose argues for the abolition of the Federal Reserve, characterizing it as an 'economic Politbureau' that manages debt rather than money. He critiques the Monetary Control Act of 1980 for expanding inflationary powers and calls for a return to the 'integrity of money' through free coinage of gold and silver and the removal of government's legal tender monopoly. [Banking Before the Federal Reserve: The U.S. and Canada Compared]: Donald R. Wells compares the pre-1914 banking systems of the U.S. and Canada. He argues that U.S. instability was caused by government restrictions—specifically the lack of branching, mandated bond-backing for notes, and fixed reserve requirements. In contrast, Canada's system of nationwide branching and flexible note issuance avoided the panics that plagued the American unit-banking system. [Conclusion and References for Bankers and Regulators]: The concluding remarks for the preceding essay argue that historical private emergency currencies outperformed the Federal Reserve during the 1930s. It suggests that government restrictions, rather than market forces, caused pre-1914 banking instability and provides a comprehensive list of 25 citations covering Canadian and American banking history. [Privatize Deposit Insurance]: Jeffrey Rogers Hummel argues that the Savings and Loan crisis of the 1980s was caused by government deposit insurance rather than a lack of regulation. He explains the concept of 'moral hazard,' where insurance subsidizes risk-taking by removing market discipline. Hummel critiques the 'zombie' institution phenomenon and purchase and assumption agreements, concluding that the only viable solution is the total privatization of deposit insurance and the dissolution of the FDIC and FSLIC. [Deposit Insurance Déjà Vu]: Kurt Schuler provides a historical overview of failed state-level deposit insurance schemes in the U.S. from 1829 through the 1980s, contrasting them with the stability of nationwide branch banking in Canada and Europe. He argues that deposit insurance is rarely self-financing and serves to protect small, inefficient banks from competition. Schuler recommends abolishing federal deposit insurance and removing barriers to branching and cross-industry competition to create a resilient banking system. [Toward Free Banking]: Wells and Scruggs outline a practical transition to a fully deregulated free banking system. Key proposals include the abolition of the Federal Reserve, the removal of entry barriers and branching restrictions, and allowing banks to issue their own distinctive banknotes. They argue that market-based clearinghouses would naturally limit credit expansion more effectively than a central bank. The essay also addresses concerns regarding deflation, private coinage, and the phasing out of the FDIC. [The Gold Standard and Fractional-Reserve Banking]: Joe Cobb argues for a gold-oriented monetary system that avoids the pitfalls of government-pegged prices. He distinguishes between 'money' (gold as a store of value) and 'credit' (the medium of exchange), suggesting that they should have distinct names to prevent hidden inflation. Cobb proposes that weight-measured gold coins should circulate at market rates against a national unit of credit, allowing the market to detect and resist government-led credit expansion without relying on official 'backing' promises. [Index and Foundation Information]: A comprehensive index for the book 'Bankers and Regulators', followed by a price list for 'The Freeman Classics' series and a profile of The Foundation for Economic Education (FEE). It highlights the organization's history, its mission to study the foundations of a free society, and the legacy of Leonard E. Read and Ludwig von Mises.
This segment contains the title page, publication details, and the comprehensive table of contents for 'Bankers and Regulators' edited by Hans F. Sennholz. It outlines the book's three-part structure: the failure of regulation, the progression from crisis to crisis, and the proposed return to sound banking, featuring various authors from the classical liberal tradition.
Read full textHans F. Sennholz introduces the volume by critiquing the prevailing belief that banking requires government oversight. He identifies and refutes three major myths: that banking is inherently unstable without regulation, that banks naturally charge usurious rates, and that effective economic policy requires state control over money. Sennholz argues that historical instabilities, such as those in the 'Free Banking Era,' were actually caused by state interventions like bond-collateral requirements and unit-banking restrictions. He further explains how usury laws and Regulation Q exacerbated financial crises by preventing market adjustments during inflationary periods.
Read full textErnie Ross argues that the Federal Reserve is tasked with contradictory goals—fighting inflation while simultaneously covering government deficits and bailing out failing banks. He contends that these interventions reward malinvestment and create a cycle of 'stagflation' and economic instability. Ross classifies the Fed as an 'economic tyranny' that subjugates private decision-making to state authority. He concludes that the only solution is to abolish the Fed and privatize all monetary functions, including currency issuance and deposit insurance.
Read full textWilliam Cullen Bryant critiques usury laws as arbitrary and oppressive price controls on money. He argues that money should be treated as a commodity governed by supply and demand rather than legislative fiat. Bryant asserts that these laws actually harm borrowers by diminishing available capital and failing to account for the varying risks associated with different types of loans and borrowers. He calls for the total repeal of the usury code to allow for a free trade in money.
Read full textKen S. Ewert examines the history and impact of the International Monetary Fund (IMF) from its origins at the Bretton Woods Conference. He argues that the IMF facilitates worldwide statist policies by providing a 'safety net' for governments that engage in inflationary spending. Ewert critiques the transition from fixed exchange rates to 'balance of payments' lending and the creation of Special Drawing Rights (SDRs) as a move toward a global fiat currency. He concludes that the IMF has failed in its stated goals and instead serves to coordinate global monetary expansion and subsidize insolvent regimes.
Read full textThis segment introduces Hans F. Sennholz's analysis of the Savings and Loan (S&L) crisis and the subsequent government bailout. It serves as the beginning of a deeper investigation into whether the state's response was a necessary rescue or a counterproductive reaction to problems caused by previous regulations.
Read full textSennholz introduces the 1980s financial disaster as a failure of government-mandated cartels and federal deposit insurance rather than a failure of the free market. He argues that the system's contradictions, exacerbated by inflation and globalization, led to the collapse of over 500 banks and 3,000 thrifts, with taxpayers ultimately underwriting the losses.
Read full textThis section traces the evolution of Savings and Loan associations from voluntary neighborhood partnerships to a highly regulated federal superstructure. Sennholz details how the Hoover and Roosevelt administrations created a financial 'supercartel' through agencies like the FHLBB, FDIC, and FSLIC, which institutionalized the risky practice of borrowing short-term deposits to fund long-term mortgages.
Read full textSennholz analyzes the structural flaws of the regulated banking cartel, noting that it stifled innovation and created massive economic maladjustments. He argues that federal deposit insurance created perverse incentives for reckless management and that government efforts to keep mortgage rates artificially low led to volatile housing cycles and significant overinvestment in real estate.
Read full textThis section examines how the combination of 1970s inflation and rigid interest rate ceilings 'squeezed' S&Ls to death. Sennholz critiques the legislative responses, such as the Garn-St. Germain Act, for encouraging dubious accounting and risky commercial ventures, while the 1986 Tax Reform Act triggered a wave of defaults in the 'Oil Patch' states by removing real estate incentives.
Read full textSennholz critiques the 1989 Bailout Act, arguing it merely reshuffled regulatory labels while tightening political control. He discusses the creation of the Resolution Trust Corporation (RTC) to manage defunct assets and the Act's social engineering provisions, such as mandated subsidies for low-income housing, which he claims will lead to further corruption and market distortion.
Read full textThe author addresses the charges of fraud and mismanagement, arguing that the regulatory system itself invited corruption. He condemns the 'hysterical' civil and criminal penalties introduced in the Reform Act, comparing them unfavorably to state laws for violent crimes, and notes the lack of accountability for the legislators and regulators who designed the failing system.
Read full textSennholz concludes by calling for the complete dismantling of the financial cartel and the privatization of deposit insurance. He argues that 'better regulation' is an oxymoron and that the only path to stability is to allow a banking industry built on private property and individual freedom to evolve without government interference.
Read full textMorris J. Markovitz attempts to resolve the debate between 100% reserve and fractional reserve banking proponents. He argues that the conflict stems from an 'intellectual package deal' where the warehousing function (safekeeping) and the loan-brokering function (investment) are conflated. By separating these functions legally and eliminating legal tender laws, both systems could coexist in a free market.
Read full textKen S. Ewert examines the causes of the 1970s-80s international debt crisis, identifying Federal Reserve inflation and the recycling of petrodollars as primary drivers. He critiques 'development economists' for encouraging statist planning in less developed countries (LDCs), which led to wasted capital, corruption, and capital flight. Ewert warns against 'socializing' these losses through international agencies or monetary inflation.
Read full textE.C. Pasour, Jr. analyzes the crisis in agricultural lending, attributing it to easy credit policies and restrictive banking regulations. He argues that subsidized loans from the FmHA and FCS encouraged over-leveraging and kept inefficient producers in the market. Furthermore, unit-banking laws prevented banks in agricultural regions from diversifying their portfolios, making them uniquely vulnerable to sector-specific downturns.
Read full textChristopher L. Culp proposes a market-based solution to the Third World debt crisis. He advocates for the securitization of debt to establish true market values, the use of debt-equity swaps to stimulate local growth and repatriate flight capital, and the privatization of state-owned enterprises. He emphasizes that U.S. banks must be held accountable through market-to-market accounting rather than relying on taxpayer-funded bailouts.
Read full textRichard M. Salsman critiques the 'too-big-to-fail' doctrine, tracing its origins to the establishment of the Federal Reserve and the 'essentiality doctrine.' He argues that central banking has caused a secular decline in bank safety and that the doctrine encourages insolvency by transforming the lender of last resort into a provider of permanent credit to failed institutions. He advocates for nationwide branching and subjecting banks to standard bankruptcy laws.
Read full textElizabeth Kolar discusses the technological transition toward a cashless society via Electronic Funds Transfer Systems (EFTS). She explores the roles of ATMs, Automated Clearing Houses, and Point of Sale terminals, noting that the elimination of 'float' is a major hurdle for businesses. She suggests that a cashless environment is compatible with free banking, where privatized clearinghouses would manage digital settlements.
Read full textLawrence H. White uses historical evidence from the 19th century to argue that unregulated banking is stable and non-inflationary. He debunks the myth of 'wildcat banking' in the U.S., explaining that instability was caused by specific state regulations rather than a lack of them. He highlights how private clearinghouses successfully monitored solvency and liquidity without government oversight.
Read full textElgin Groseclose argues for the abolition of the Federal Reserve, characterizing it as an 'economic Politbureau' that manages debt rather than money. He critiques the Monetary Control Act of 1980 for expanding inflationary powers and calls for a return to the 'integrity of money' through free coinage of gold and silver and the removal of government's legal tender monopoly.
Read full textDonald R. Wells compares the pre-1914 banking systems of the U.S. and Canada. He argues that U.S. instability was caused by government restrictions—specifically the lack of branching, mandated bond-backing for notes, and fixed reserve requirements. In contrast, Canada's system of nationwide branching and flexible note issuance avoided the panics that plagued the American unit-banking system.
Read full textThe concluding remarks for the preceding essay argue that historical private emergency currencies outperformed the Federal Reserve during the 1930s. It suggests that government restrictions, rather than market forces, caused pre-1914 banking instability and provides a comprehensive list of 25 citations covering Canadian and American banking history.
Read full textJeffrey Rogers Hummel argues that the Savings and Loan crisis of the 1980s was caused by government deposit insurance rather than a lack of regulation. He explains the concept of 'moral hazard,' where insurance subsidizes risk-taking by removing market discipline. Hummel critiques the 'zombie' institution phenomenon and purchase and assumption agreements, concluding that the only viable solution is the total privatization of deposit insurance and the dissolution of the FDIC and FSLIC.
Read full textKurt Schuler provides a historical overview of failed state-level deposit insurance schemes in the U.S. from 1829 through the 1980s, contrasting them with the stability of nationwide branch banking in Canada and Europe. He argues that deposit insurance is rarely self-financing and serves to protect small, inefficient banks from competition. Schuler recommends abolishing federal deposit insurance and removing barriers to branching and cross-industry competition to create a resilient banking system.
Read full textWells and Scruggs outline a practical transition to a fully deregulated free banking system. Key proposals include the abolition of the Federal Reserve, the removal of entry barriers and branching restrictions, and allowing banks to issue their own distinctive banknotes. They argue that market-based clearinghouses would naturally limit credit expansion more effectively than a central bank. The essay also addresses concerns regarding deflation, private coinage, and the phasing out of the FDIC.
Read full textJoe Cobb argues for a gold-oriented monetary system that avoids the pitfalls of government-pegged prices. He distinguishes between 'money' (gold as a store of value) and 'credit' (the medium of exchange), suggesting that they should have distinct names to prevent hidden inflation. Cobb proposes that weight-measured gold coins should circulate at market rates against a national unit of credit, allowing the market to detect and resist government-led credit expansion without relying on official 'backing' promises.
Read full textA comprehensive index for the book 'Bankers and Regulators', followed by a price list for 'The Freeman Classics' series and a profile of The Foundation for Economic Education (FEE). It highlights the organization's history, its mission to study the foundations of a free society, and the legacy of Leonard E. Read and Ludwig von Mises.
Read full text