White's first-best proposal is a free banking system based on a gold or silver standard with no central bank, in which competing private banks issue currency and discipline each other: any bank that over-issues finds its money returning for redemption and loses reserves to other banks through the clearing house, making the underlying-money constraint immediately binding.

normativepending

Speaker

Larry White

Evidence Quote

any one bank that issues more money than its customers want to hold we'll find the money returning to it for redemption and it'll be losing reserves to the other banks

Source

Larry White on Hayek and Money 02/01/2010EconTalk
Created: 6/17/2026, 10:31:20 AM

My Notes

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