Some years ago I published a paper on the banking theory and policy views of the important twentieth-century economist Friedrich A. Hayek, entitled “Why Didn't Hayek Favor Laissez Faire in Banking?”[1] Very recently, working on a new paper on Hayek’s changing views of the gold standard, I…
The majority of federally insured savings and loans failed in the 1980s, wiping out the Federal Savings and Loan Insurance Corporation in 1989. The fiasco ultimately cost taxpayers around $150 billion to make savings depositors whole. Two years later, the failures of hundreds of commercial banks put…
[A well-known consequence of the Fed's rescue efforts consists of the "moral hazard" they pose–that is, their tendency to encourage extra risk-taking by persons who suppose that they, too, will be rescued if their wagers don't pay. Yet one particularly dangerous sort of moral hazard hasn't gotten…