The most familiar story of the need for extensive bank regulation depicts pre-Federal Reserve banking in the U.S. as chaotic, rife with uncertainty and bank failure. But that's not the story that a more complete history offers. In the regulation vs. deregulation debate, there are important instances of well-functioning free enterprise banking and market discipline. In the U.S., the best example is the Suffolk Clearinghouse system.
Interest rates may be rising, mortgage lending companies and news reports are telling us. A recent ad blitz by a well-known mortgage company clearly suggested that the Federal Reserve would raise mortgage interest rates soon and urged potential loan customers to lock in home loans before that happened. In fact, the Fed doesn't control mortgage interest rates.
Whomever succeeds Alan Greenspan as chairman of the Federal Reserve will wield considerable clout over the economy.
The real cause of inflation is the Federal Reserve and the amount of new money it introduces into the economy.
