Continental Illinois, Gary Gorton, lender of last resort, Too Big To Fail, Walter Bagehot

According to Gary Gorton and Ellis W. Tallman, in their  recently released NBER Working Paper, some were. For several decades prior to the Fed's establishment, Gorton and Tallman note, "private bank clearinghouses provided lending facilities and assisted member banks when they needed help."  The pattern of such assistance, they say,…

corporate bonds, discount window, liquidity traps, Marginal Revolution, Tyler Cowen

These are challenging times for monetary economists like myself, what with central banks making one dramatic departure after another from conventional ways of conducting monetary policy. Yet so far as I'm concerned, coming to grips with negative interest rates, overnight reverse repos, and  other newfangled monetary control devices is a…