No, but it makes it much more suseptible to political manipulation and corruption.Originally Posted by FallenWyvern
Free markets aren't naturally prone to boom/busts cycles. Just as "manias" always have a cause and usually that cause is some expansive monetary policy. Tulip mania is no exception. If you look back at the causes of Tulip mania, you'd see several government policies that served to instigate and bolster the mania. Free coinage, the Bank of Amsterdam and, as result, the influx of gold from the "New World" all led up to a large increase in the money supply and the subsequent Tulip speculation/trade. So, just because fractional reserve banking wasn't the cause of Tulip mania doesn't mean monetary policy wasn't at the root of the problem.
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