Moreover, I certainly have no doubt that in the event of problems in today’s new, more Spencerian, form of capitalism, governments would increase their interventions in an endeavor to alter market results. And, as history amply demonstrates, most recently in East Asia, market -- or mostly market -- systems can produce crises that tempt government intervention.
For example, a monetary policy induced reduction of banks’ reserve holdings could lead to a contraction in loan supply if banks are not fully able to replenish their reserve holdings through the issuance of securities or deposits.