Saturday, April 4, 2026 
Quantitative Easing Is Old School
The Shrink forwarded me a great article on the exploits of Larry Law and his attempts at quantitative easing before the French Revolution in 1789.
Add The French Revolution to the list of events that took place in a year that ends in 9.
“But one lesson from Law’s sorry tale endures: attempts to maintain asset prices above their fundamental value are eventually doomed to failure.”
“So a vicious circle was created, in which a growing money supply was needed to bolster the share price of the Mississippi company and a rising share price was needed to maintain confidence in the system of paper money. You can see parallels with recent times, in which money was lent on the back of rising asset prices, and higher prices gave banks the confidence to lend more money.”
“When the scheme faltered Law resorted to a number of rescue packages, many of which have their echoes 300 years later. One was for the bank to guarantee to buy shares in the Mississippi company at a set price (think of the various government asset-purchase schemes today). Then the company took over the bank (a rescue along the lines of Fannie Mae and Freddie Mac).”
There is a good book that discusses France’s horrendous experience with QE - FIAT Money Inflation in France. You should check it out:
mises.org/books/inflationinfrance.pdf
Comment by Mike — August 17, 2009 @ 7:18 am
Thanks for the link.
V
Comment by Mr. Volatility — August 17, 2009 @ 11:25 am
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