[jteppinette]

First, the money supply and price of money has been manipulated since before central banks existed.

I don’t exactly understand your thesis, because, of course the federal reserve existing more than a decade before the Great Depression and is a primary driver for the credit expansion that caused the Great Depression to be so large and long lasting. Artificial manipulation, as I described above, is what causes the natural movements of an economy to be so extreme.

[cykros]

While I don't think I want to delve too into the matter, arguably, the Federal Reserve NOT holding more control over the amount of money flooding into the system through repeated rehypothecation of securities as the roaring 20s saw banks and brokerages happy to loan out more and more money had a lot to do with its occurrence in the first place. Prior to the Securities Act of 1933, and later Regulations T, U, and X (https://en.wikipedia.org/wiki/Regulation_T), brokerages and banks had a lot more leeway in determining their own reserves. Which ultimately, particularly in a booming securities market, means that they were largely unregulated when it came to raising the total amount of money in circulation at least in nominal terms. The aforementioned regulations took great strides in curtailing this excessive power and brought margin rates and reserve requirements under the domain of the Federal Reserve as tools for manipulating the cost and flow of money toward serving their dual mandate.

If there is a particular institution that is exacerbating the peaks and troughs of the business cycle, it is credit itself. Going back a few centuries, in Europe anyway, the usury laws used to forbid (Christians anyway) from lending money at interest, being seen as effectively a form of theft (think of laws limiting loan sharks now). The business cycle is tied right back to the credit cycle (to the extent that the words are used almost interchangeably), and if you remove the existence of credit, you remove much of the boom and bust cycle that goes with it. This said, it's worth determining if this is REALLY what you want, as prior to the availability of credit, the ability to start businesses and innovate was significantly reduced, and generally, only available to the particularly wealthy.

Central banking was just a means of trying to bring some order to the chaos that all of this credit flowing around was having. Sometimes it seems to work well; other times, it feels like the cure may be worse than the disease. Either way, it's worth knowing about the beast its there to attempt to cage.