[...]... tightening at that late stage The Florida land bubble had burst in early 1926 The real estate markets generally peaked in 1927 and the construction boom had reached its peak a year later (In any analysis of US real estate markets allowance must always be made for the high degree of regional heterogeneity) Most of this had happened before the late deliberate raising of rates by the Federal Reserve to... prevailed against the contrary opinion of Secretary of State Bryan (a powerful figure on the liberal wing of the Democratic Party who had long campaigned as an enemy of gold, banks and the railroad companies) who had argued in favour of an immediate suspension of the gold standard (Bryan had critically swung his supporters behind the nomination of Wilson as presidential candidate at the 1912 Democratic Convention;... embrace swings in asset and credit market temperature, agree that Federal Reserve policy in the years 1921–5 was expansionary as viewed by the metric of the monetary base In particular, they point out that the advent of the Federal Reserve System was leading to an economization in demand for excess reserves (the development of a market in the early 1920s for federal funds abetted this) and that a shift... in the case of Germany to argue whether or not the mark was fundamentally over-valued against the dollar at this time The exchange rate between the mark and dollar had been fixed at the end of the hyper-inflation when there was really no domestic price level (all prices virtually were quoted in dollars in Germany at that point) But the flood of US loans into Germany (the international dimension of the. .. powerful official in the new system, though there were some ambiguities about how power would be divided between New York and the Board in Washington At the head of the Board was Charles Hamlin, also in the Morgan sphere, as was the Treasury Secretary McAdoo, whose railroad company had been bailed out personally by J.P Morgan Under the initial organization of the Federal Reserve, the Treasury secretary was...2 The Global Curse of the Federal Reserve The Federal Reserve was making it more likely that the US would eventually be drawn into the war The facilitating of loans reduced the pressure on the Entente Powers from financial exhaustion to lower their minimum demands (regarding territory, reparations, security) for entering peace talks (with the Central Powers) These would have had, as their aim, an early... been the right-hand man of J.P Morgan during the 1907 financial panic and later put at the head of Bankers Trust Murray Rothbard (see Rothbard, 200 2a) makes much of the importance of the ‘Morgan club’ as a factor in understanding Federal Reserve policy in its early years Strong, in taking the position as head of the New York Federal Reserve, had confidently expected that in this role he would be the. .. meaning of US monetary instability in a global context and suggest a way forward to less instability in the future The recommended path is radical It proceeds via a second monetarist revolution evoking free market (rather than bureaucratic) determination of interest rates, monetary system reform (reverting to high noninterest bearing reserves), and an anchoring in the form of a stipulated low rate of. .. and was close to, having married into, the New York banking house of Kuhn, Loeb Warburg has been seen by many historians as the father of the Fed’ in the light of his powerful intellectual and political advocacy of a US central bank derived from his experience and admiration of German banking arrangements and his dismay at the ‘primitive state’ of monetary arrangements which he perceived on arrival... rate of increase in the monetary base (consisting of cash in circulation and reserves) which learns from the failure of the first monetarist revolution In this first chapter the narrative is largely historical so as to set the scene for the later discussion of what has gone wrong and what reform should take place Greater space is given to earlier rather than later events as the latter are much more . on the liberal wing of the Democratic Party who had long campaigned as an enemy of gold, banks and the railroad companies) who had argued in favour of an immediate suspension of the gold standard global credit bubble of the 2000s. There are many destinations along the way (including the Great Inflation and collapse of the Global Dollar Standard, Latin American lending bubble, South Asian. monetary sta- bility as meaning a stable price level over the short- or medium-term, either at a national level or at the level of the gold bloc as a whole. But there was an over-riding long-run