I’ve just discovered a recent interview with Professor Huerta de Soto, released on April the 15th, this year. Okay, so this is hardly ‘hot off the press’, but I’m very much a believer in the school of better late than never, and the universal truths of human nature and human action never dim just because of a few measly days.
Here’s the interview:
Here’s the full description:
An exclusive interview with professor Huerta de Soto
In this interview, Jesús Huerta de Soto, Professor of Political Economy at Rey Juan Carlos University, Madrid, outlines how central banks caused the financial crisis. He explains why fractional reserve banking causes economic problems, and why artificially-low interest rates are a bad idea. Fractional reserve banking creates “too big to fail” banks. An 100 per cent reserve system would give smaller banks a chance to compete.
Huerta de Soto also discusses the paradox of blaming the free market for the financial crisis, how the monetary system has been nationalised, and how central banking amounts to “pure socialism”. De Soto argues that efforts by central banks to maintain an “optimum” money supply and fix interest rates at the “correct” level are doomed to failure.
Furthermore, he explains the three measures he would take to fix the financial system. These are 100 per cent bank reserve requirements, the abolition of central banks and the implementation of a pure gold standard. He outlines why under a free banking system, fractional reserve banking would die out.
Although gold would likely play a role in a free-market monetary system, the professor states that a gold standard system can only work in an 100 per cent bank reserve system. Huerta De Soto argues that the popularity of banking theories is irrelevant in assessing their validity.
At the end, he discusses how his book, Money, Bank Credit and Economic Cycles, has been favourably received and translated into many languages, and how it can help central bankers anticipate economic cycles. He also shares how encouraging it is that students around the world are becoming critics of fractional reserve banking and supporters of sound money.
You can read a full transcript of this video here.