Lombard Street

While it was written more than a century ago, Walter Bagehot's description of the British money market in Lombard Street, which accounts for the causes of the financial crises of his own time, is an interesting read in light of the financial crises of the present day: we appear to have roughly the same system, and face roughly the same problems, and for roughly the same reasons.

The qualifier of "roughly" is necessary to account for certain differences in the two systems: In current-day America, there is considerably more credit used by considerably more people than in nineteenth-century Britain, we lack a valid commodity base for our currency, and the like - but much of these details seem incidental in light of the larger similarities: a central bank that maintains the reserves of all other banks, as well as the banks and government accounts of foreign nation, and the problem of maintaining a reserve that meets the apprehension minimum of an increasingly fickle and timorous consumer market.

And, as was concluded one and a half centuries ago, we deal with a problematic system that is so widely supported in spite of its failts that the only recourse is to make the best of it, such as it is, and work within it, such as we can.