The Keynesians are usually quick to insist that “central banking” is not possible with a gold standard system. They think that they invented it.
The Bank of England is normally credited with creating the processes known today as “central banking.” This took place over a long period of time, but the Bank’s first great success as a “lender of last resort” is generally considered to be during a crisis in 1866, during which the Bank made loans from its discount window at a penalty rate of 10%, thus defusing the crisis.
Read Full Article »