The interpretation that Mises preferred banking with a 100% reserve requirement finds strong support in Huerta de Soto’s Money, Bank Credit, and Economic Cycles. This article seeks to review his arguments concluding that it is in fact more feasible to interpret that Mises preferred free banking with fractional reserves to the 100% reserve requirement.
Thursday, 3 February 2011
Mises on fractional reserves
It is often argued that Ludwig von Mises was in favour of a 100% reserve requirement for banks. Such a view is put forward in Huerta de Soto's Money, Bank Credit, and Economic Cycles. Now this interpretation is being challenged. Nicolas Cachanosky has a new working paper out on Mises on Fractional Reserves: A Review of Huerta De Soto's Argument. The abstract reads: