"IMO it'd be sensible to let the markets set the interest rate." We tried that and it was completely untenable. During the 1700s and 1800s more and more of soc

"IMO it'd be sensible to let the markets set the interest rate." We tried that and it was completely untenable. During the 1700s and 1800s more and more of society switched from the non-monetary economy to the monetary economy, and more people went out and got jobs for money, and at the same time economic growth became entirely dependent on debt, so that by the late 1800s the Western nations were witnessing wild swings, where the economy would grow 15% one year and then crash into a 10% depression the next year, then grow 14% a year for two years and then have another major depression. The instability was leading to revolution in many countries. In the end, the government had to step in and regulate the speed at which new debt could be issued, so as to smooth out the business cycle. Britain did this first. In the USA the idea of a central bank was much contested during the 1800s but finally it was made official in the early 1900s.