[landl.michael1]

Hello,

I was wondering what the main reasons are for the massive increase of the financial industries’s power/influence during the 20th and 21st centurie from an Austrian view.
In other words, How did Goldman Sachs become what it is?

[jmherbener]

Here are a few sources to consult:

http://library.mises.org/books/Murray%20N%20Rothbard/The%20Origins%20of%20the%20Federal%20Reserve.pdf

http://library.mises.org/books/Murray%20N%20Rothbard/Wall%20Street,%20Banks,%20and%20American%20Foreign%20Policy.pdf

Also, James Grant’s book, Money of the Mind.

[landl.michael1]

Thank you very much for your fast response, I am through “The origins of the Fed” now and it is clear to me now how the central bank influences the whole business cycle through the manipulation of the interest rate. But I still don’t really get the role of the individual “private” banks, especially from a historical point of view. I mean sure they borrow cheap from the Fed and expand the money supply through the system of fractional reserves. But is that the only reason why they could get so powerful? How could the governments become so dependent on those banks? Are their any papers or books which focus more on the development of the “private” banks?
Thanks in adcance for your help and I promise I won’t bother you anymore ;-)!

Greedings from Europe.

[samgheb]

Maeher
You should take a look at the second link Prof. Herbener provided. It should provide you with the answers you need. Remember that although the monograph Rothbard wrote applies to America the same basic mechanism has been going on in other countries as well. Given that the government(or kings in earlier times) are always looking for money, banks will necessarily have a upper hand. So banks and government go, and grow, together in a way. I think Thomas Jefferson said that he regretted giving government the power to borrow money.

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