Central Banking in a Democracy: The Federal Reserve and its Alternatives, 1st Edition (Hardback) book cover

Central Banking in a Democracy

The Federal Reserve and its Alternatives, 1st Edition

By John H. Wood


222 pages | 16 B/W Illus.

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Hardback: 9781138016392
pub: 2014-10-15
eBook (VitalSource) : 9781315781044
pub: 2014-10-17
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The Federal Reserve System, which has been Congress’s agent for the control of money since 1913, has a mixed reputation. Its errors have been huge. It was the principal cause of the Great Depression of the 1930s and the inflation of the 1970s, and participated in the massive bailouts of financial institutions at taxpayers' expense during the recent Great Recession.

This book is a study of the causes of the Fed’s errors, with lessons for an improved monetary authority, beginning with an examination of the history of central banks, in which it is found that their performance depended on their incentives, as is to be expected of economic agents. An implication of these findings is that the Fed’s failings must be traced to its institutional independence, particularly of the public welfare. Consequently, its policies have been dictated by special interests: financial institutions who desire public support without meaningful regulation, as well as presidents and those portions of Congress desiring growing government financed by inflation.

Monetary stability (which used to be thought the primary purpose of central banks) requires responsibility, meaning punishment for failure, instead of a remote and irresponsible (to the public) agency such as the Fed. It requires either private money motivated by profit or Congress disciplined by the electoral system as before 1913. Change involving the least disturbance to the system suggests the latter.

Table of Contents

1. Introduction 2. Early central banks 3. Central banking in the United States, 1847-1913 4. The Federal Reserve Sysyem, 1913-51 5. The Federal Reserve, 1951-99 6. The Great Recession 7. Bank regulation 8. Conclusion: The necessity and possibility of replacing the Fed

About the Author

John H. Wood is Reynolds Professor of Economics at Wake Forest University, Winston-Salem, North Carolina, USA.

About the Series

Routledge Explorations in Economic History

This long established series provides a platform for books which break new ground in the understanding of the development of the modern world economy. Equally rooted in economics and history, the series is not limited to any particular period or region. Individual titles focus on particular countries, key industries, themes, or international economic relations.

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Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Banks & Banking
BUSINESS & ECONOMICS / Economic History