![]() ![]() Indeed, to continue the religious imagery, Bagehot’s own name has become something of a shibboleth in central banking circles. It should simply follow Bagehot’s dictum: “lend freely, at a penalty rate, against good collateral.” This dictum-sometimes referred to as a Rule, sometimes as a Law-is the gospel for central bankers, as applicable to today’s markets as they were at the time he wrote it 140 years ago. In Lombard Street, Bagehot became the first to articulate what a central bank should do to prevent a panic from becoming a crisis. ![]() Walter Bagehot is Victorian prophet of central banking, the author of the “ bible of central banking,” Lombard Street: A Description of the Money Market. Review of Lombard Street: A Description of the Money Market, by Walter BagehotĪmong central bankers and fellow traveling academics and financiers, a common trope has arisen to celebrate this once obscure nineteenth century editor of The Economist magazine. Misreading Walter Bagehot: What Lombard Street Really Means for Central Banking ![]()
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