I’m a little confused on how this resonated.
I’m glad they put “free banking” in quotes.From the Wiki article on this:
In this period, there were no central banks, and many states elected to adopt free banking laws.[3] These banks could issue bank notes against specie (gold and silver coins) and the states regulated the reserve requirements,interest rates for loans and deposits, the necessary capital ratio etc. The Michigan Act (1837) allowed the automatic chartering of banks that would fulfill its requirements without special consent of the state legislature. It is reported that numerous banks were allowed to begin during this period which ultimately proved to be unstable.[4] The real value of a bank bill was often lower than its face value, and the issuing bank’s financial strength generally determined the size of the discount.
How is it “free banking” when the states regulated the reserve requirements interest rates for loans and deposits, and capital ratio? Also, you don’t need a central bank for there to be a business cycle.
So those individual state chartered banks manipulated interest rates and increased the money supply, instead of a “federal reserve”, correct?