History of Money and Banking

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Introduction
In the last few years, there has been a significant debate on what has caused America’s economic woes. However, few people choose to look at what has caused economic downturns in the past. Some believe that it is the government and central banking’s job to steer the economy in the right direction. While others believe that it is not their job, but the free market’s. Perhaps it is something in between as a symbiosis between government and the free market working together to get things done. Many questions should be asked such as: what is the history of money and banking in the United States? What has proven sustainable monetary policy and how all this either helped or harmed by government involvement? These are important questions on the future of the United States. In the words of John Maynard Keynes, “The ideas of economist both when they are right and when they are wrong are more powerful than commonly understood. Indeed the world is ruled by little else.”(Keynes, 2008) p247 The answer to those questions can be answered by research into this subject. As I answer those questions, I will also be able to answer the major question of: What has caused booms and busts in the past and how or can we prevent them?

What is the History of Money and Banking?
Before answering the major question, the history of money and banking must be discussed. It starts with the Colonial era and ends with the closing of World War II. The findings will help one understand the full picture. As F.A. Hayek quipped, “The curious task of economics is to prove to men how little they really know.” (Hayek, Fatal Conceit)
Colonial Era 1607-1762
The Colonial Era was a time of emerging economic development and intrusion by the British Parliament. In ...

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Folsom Jr., Burton. (2009). New Deal or Raw Deal?: How FDR’s Legacy had Damaged America. New York, NY: Threshold Editions.
"National Bank Act of 1863." Gale Encyclopedia of U.S. Economic History. 2000. Retrieved November 26, 2013 from: http://www.encyclopedia.com/doc/1G2-3406400620.html
“First Bank of the United States – Conservapedia” Conservapedia. Retrieved November 26, 2013 from: http://conservapedia.com/First_Bank_of_the_United_States.
“Second Bank of the United States” History Central. Retrieved November 26, 2013 from: http://www.historycentral.com/Ant/Economics/Second.html.
“Great Depression – Mises Wiki, the global repository of classical-liberal thought” Mises Institute. Retrieved November 27, 2013 from: http://wiki.mises.org/wiki/Great_Depression#cite_note-Folsom_spending-55

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