Friday, May 20, 2005

Fractional Reserve Banking.................How banks may cause inflation

For anyone interested in some insight into how banking works, particularly the US banking system, the Mystery of Banking by Dr. Murray Rothbard (http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf) should serve as an interesting read. Dr. Rothbard was one of the driving forces behind the the Austrian School of economics. Click here to learn more about the Austrian School of Economics or here for an abridged summary. My sense is that followers of the Austrian School may be viewed as a "little wacked" by the rest of the economics world............but hey, whatever floats your boat! For those interested in a critique of the Austrian School, take a look here.

Since I am not well versed in the specifics of each school of economic thought and being the simple type who believes that the only way one learns is by doing, I am endeavoring to start my own school of economic thought, The Simple School of Economics. Our central tenents are:

  • Buy for $1, sell for $2
  • Making money is good, losing money is bad
  • He who has the gold makes the rules (a.k.a. - The Golden Rule)

We are currently in the process of endowing a economic research foundation, The Simple School of Economics Research Foundation, and are looking for academics who will publish research that supports our theories and refutes everyone elses. Seeing as how I will be paying all of the researchers salaries, this should not be to hard.

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