We Need Free Enterprise in Banking

The market contains built-in checks on inflation by any single bank. In this context, we understand Mises’s argument that central banks–far from protecting the public–actually serve to cartelize the banks. A central bank throws the commercial banks into one pool that can inflate together, and by acting as a “lender of last resort” the central bank can rescue any individual bank that suffers the normal consequences of creating too much money and seeing its reserves dwindle