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The Theory of Free Banking

4.0 out of 5 stars 4 customer reviews
ISBN-13: 978-0847675784
ISBN-10: 0847675785
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Editorial Reviews


...George Selgin ably dissects the anatomy of free banking, its function and its prognosis. ^IThe Theory of Free Banking^R may be seen in 50 years as one of the most influential economics books written. (Ny City Tribune)

Selgin does more than provide a fresh hearing for free banking. By framing monetary questions in the broadest context, he contributes importantly toward the integration of price theory and monetary theory. (The Southern Economic Journal)

It would be hard to recommend this book too highly. It exhibits extensive research, lucid thinking, and some very provocative conclusions. There can be no doubt that some of Selgin's arguments will be challenged for this is a book that will be hotly debated. Above all, it is essential reading for all monetary and financial theorists. (The Journal Of Economics)

...the importance of Selgin's contribution should not be underrated....With books such as Selgin's, there is hope for the future of ideas and our banking system....^IThe Theory of Free Banking^R presents what is probably the most important and challenging statement in the field of money and banking of this century. (The Detroit News)

...written in the style of an excellent teacher who has constant intellectual contact with his students. His audience can be interested laymen as well as professional economists. (Journal of Money)

an ambitious work....It not only employs theory to explore alternative institutions but also enriches the theory itself. (Austrian Economics Newsletter)

^IThe Theory of Free Banking provides a way to escape from the heads-I-win tails-you-lose dilemmas present in current debate about monetary reform. This is solid intellectual nourishment for friends of economic liberty. (Laissez Faire Review^R)

George Selgin develops a forceful argument that the existing regulated banking system based on central bank monopoly note issue should be replaced by an unregulated system in which commercial banks are free to issue bank notes as well as deposits. (Anna J. Schwartz)

George Selgin's major contribution in this book is to show how competition among completely free, unregulated banks-issuing their own currency-would work, and in my mind he has proven it would be more stable and sound than our current regulatory mess. (Joe Cobb)

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Product Details

  • Hardcover: 232 pages
  • Publisher: Rowman & Littlefield Publishers (June 28, 1988)
  • Language: English
  • ISBN-10: 0847675785
  • ISBN-13: 978-0847675784
  • Product Dimensions: 6 x 1 x 9 inches
  • Shipping Weight: 1.3 pounds
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (4 customer reviews)
  • Amazon Best Sellers Rank: #2,571,487 in Books (See Top 100 in Books)

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By Patrick M. Hussey on January 14, 2013
Format: Hardcover
If you are looking for an exploration into the monetary mechanics of a free banking system, and how money supply would work under competitive note issue, look no further.
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Format: Hardcover
If you're serious about libertarian theories of banking, or even really about monetary economics in general, then you need to read this book. It's a true classic of modern economics, dedicated to examining what a truly laissez-faire banking system would look like. This means an entirely privatized banking system, with currency/notes being supplied competitively by banks rather than the government. Sound crazy? Well, Selgin's book is no frothing-at-the-mouth libertarian diatribe, but a scholarly examination of competitive banking and, I believe, a major theoretical advance.

Selgin begins his examination by tracing the monetary history of a fictitious country named Ruritania, which happily devotes itself to life under blissful laissez-faire. The attenuated history is that the people settle upon a medium of exchange, they create banks which issue deposits and banknotes, and banks create a clearinghouse system for settling debits between themselves. Nothing particularly remarkable here, as this is more or less what has actually happened in monetary history, and there's no real reason to doubt this chain of events. Note though, the clearinghouses form the very fulcrum of his theory. This history mainly exists to form an introduction, which leads next into monetary theory.

The basic question to be asked is: What should an ideal banking and monetary system accomplish? Selgin says, very plausibly, that an ideal monetary system ought to achieve monetary equilibrium; that is, there will be a given demand for real cash balances at any level of real income and a given demand for nominal cash balances at given levels of real income and prices.
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Format: Hardcover Verified Purchase
A must read .. this is the sort of reason for bitcoin and why I am not in it. Service was first rate ... on time delivery, in better than described condition ... 100% happy !!!!
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Format: Hardcover
Selgin is a fringe/Austrian/Cato economist who thinks the world would be better off if there were no FDIC bank insurance so that naive depositors could lose their life savings every few years through bank failures.

The USA actually had fairly extensive experience of "free" (i. e. unsupervised, unaudited, corrupt, speculative) banking in the frontier areas of the country in the 1820s through 1850s. Today that period is known -- for pretty good reasons -- as "The Broken Bank Era".
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