Prologue: "With devouring fury" -- "Large, wild, fiery, black" -- "In mirth and refutation; in ridicule and laughter" -- "Vive la guillotine" -- The literary banker -- "The ruin inflicted on innocent creditors" -- "The young gentleman out of Miss Austen's novels" -- A death in India -- The...

The nineteenth-century economist Walter Bagehot maintained that in order to prevent bank panics, a central bank should provide liquidity at a very high rate of interest. However, most of the theoretical literature on liquidity provision suggests that central banks should lend at an interest rate...