Who’s Driving the Bus?
Posted by: John Phoenix
Around 1905, there seemed to be a groundswell, orchestrated from the behind the curtain one may presume, for a central bank to backstop the U.S. banking network of 24,392 banks.In those days, as in days gone by, banks took in deposits of gold and allowed depositors to write checks against those deposits. And not wishing to restrain their business growth, allowed depositors to borrow against those deposits but keeping the loan to value ratio restrained from overexpansion. Still the spread was pretty hefty, like 25% of money actually backed by gold on deposit. Occasionally, there occurred “bank Runs,” where depositors felt their deposits in danger of being lost, would run to the bank to withdraw their gold. Of course, having overdrawn their deposit account...










