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This is the fifty-second video installment from Porkopolis Economics, covering macro and money, from the creator of the Crypto Voices podcast.

Contents

00:00 Intro

00:30 Walter Bagehot

03:20 Bagehot's theory on the lender of last resort

04:56 Great depression (with Bank reserves)

08:14 Fed funds effective rate

10:59 Discount rate is 'penalty' in 50s & 60s

12:35 Discount rate since late 60s not 'penalty'

Here we look at the Federal Reserve's weekly balance sheet versus its base policy interest rate in the 1910s and 1920s, which is called the 'Discount rate.' In the early days, this was the rate of interest that banks could get for borrowing directly from the Federal Reserve (and not just in emergency situations, as is the case today), called the 'Discount window.'

Walter Bagehot in Lombard Street is quoted very often by central banks, as having defined the original theory of the 'Lender of last resort.' As we see, for most of the Federal Reserve's history, they do not follow his advice.

Link to great ep with economist George Selgin on Bagehot, and money: https://open.spotify.com/episode/6AeODcjMg6AojFE7s3W5UQ

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Show content is not investment or financial advice in any way.