Letting It Burn Out, and Other Devices

Assume plethora, speculation, panic, as in the epigraph from Walter Bagehot. What then? The management of crises will occupy the next three chapters. This, the first, will consider initially the possibility that the best remedy for panic is to leave it alone, letting it run its course. We then discuss a variety of assorted expedients that have been used in the real world, short of issuing new money through a lender of last resort. The two chapters that follow consider the role of the lender of last resort, first domestically in Chapter 10, then internationally in Chapter 11.