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Quotation of the Day…

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… is the concluding paragraph, from page 175, of George Selgin’s pioneering and important 1988 book, The Theory of Free Banking [2] (original emphasis; footnote excluded):

In another sense, though – that which concerns the course of the money supply – the consequences of free banking are predictable.  The environment it produces is favorable to entrepreneurial decision-making and to the undertaking of ventures expected to yield their fruits through long periods.  Nothing of the sort can be said of regulated, centralized systems of money supply.  This is true, not only because those in charge of a centralized system cannot have the information necessary for stability … but also because stability is simply not in the interest of those in charge.  I have for the most part refrained from emphasizing the second point; but it would be foolish to ignore it entirely and to pretend that politicians are not self-interested persons whose interests often conflict with the goal of maximum consumer welfare.  Admitting this, the fact remains that a centralized banking system would work badly even if angels (but not omniscient angels) were placed in charge of it.