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The First Central Bank

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Zizzer Posted: Tue, May 24 2011 7:56 PM

I'm relatively new to AE, and I've recently been reading about the Hamilton vs. Jefferson struggles of the United States' early history.  I know that today the Fed creates a slew of problems by increasing the money supply, but how exactly was the first central bank harmful since the paper money was still backed by gold (limiting what they could print).

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Rcder replied on Tue, May 24 2011 8:25 PM

Currency debasement, suspension of payment, the circulation of money-substitutes in excess of gold reserves (sometimes called "fiduciary media"), the list goes on and on.

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