by Alasdair MacLeod
“Because your question searches for deep meaning, I shall explain in simple words.” – Dante, Inferno
Periodic economic destruction by bank credit is not new. It has been a problem for millennia. The basis of it, the ownership of bank deposits which should be safely held as assets in custody and not taken into ownership by the banks, goes back even to ancient Greece.
The Romans ruled that the practice was fraudulent in the third century, and empirical evidence ever since has shown that banks taking into their ownership depositors’ assets usually end up in crisis both for themselves and their borrowing customers.
This article looks briefly at the history of bank credit from ancient Greece, through the 1844 Bank Charter Act, the debate of the Currency and Bullion Schools, to modern economic interpretations.