Dr. George Selgin explains Walter Bagehot’s classic lender of last resort rule stating that, during a crisis, central banks should lend freely to solvent institutions at high rates of interest. During the financial crisis of 2007 / 2008, the Fed did the exact opposite by lending to insolvent institutions at the expense of the solvent ones.
Please visit this site to see Dr. Selgin’s entire presentation to AFF Atlanta from July 23.
George Selgin is a professor of Economics at the University of Georgia, a senior fellow at the Cato Institute, and the author of the book Good Money.
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