Introduction In recent years there has been significant debate about what has caused America's economic problems. However, few people choose to look at what has caused economic downturns in the past. Some believe it is the job of the government and central banks to steer the economy in the right direction. While others believe that it is not their job, but the free market's. Maybe it's something in between, a symbiosis of government and the free market working together to get things done. Many questions should be asked such as: What is the history of money and banking in the United States? What has demonstrated the sustainability of monetary policy, and how has this helped or hurt government involvement? These are important questions about the future of the United States. In the words of John Maynard Keynes, “The economist's ideas, both when they are right and when they are wrong, are more powerful than is commonly understood. In fact, the world is governed by little else.” (Keynes, 2008) p247 The answer to these questions can be given by research on this topic. As I answer these questions, I will also be able to answer the main question: What has caused booms and recessions in the past and how or can we prevent them? What is the history of money and banking? Before answering the main question, the history of money and banking must be discussed. It begins with the colonial era and ends with the end of World War II. The results will help understand the full picture. As F. A. Hayek quipped, “The strange task of economics is to show men how little they really know.” (Hayek, Fatal Conceit)Colonial Era 1607-1762The colonial era was a time of emerging economic development and intrusion by the British Parliament. Center of sheet......e/c477c1cf-197f-4df7-8e6f-efc425f6fac3/page/709c5245-d33f-40a9-b18f-e56667a40431.Folsom Jr., Burton. (2009). New Deal or Raw Deal?: How FDR's legacy had damaged America. New York, NY: Threshold Editions. "National Bank Act of 1863." Gale Encyclopedia of the Economic History of the United States. 2000. Retrieved November 26, 2013, from: http://www.encyclopedia.com/doc/1G2-3406400620.html“First Bank of the United States – Conservapedia” Conservapedia. Retrieved November 26, 2013, from: http://conservapedia.com/First_Bank_of_the_United_States.“Second Bank of the United States” History Central. Retrieved November 26, 2013, from: http://www.historycentral.com/Ant/Economics/Second.html.“Great Depression – Mises Wiki, the global repository of classical-liberal thought” Mises Institute. Retrieved November 27, 2013, from: http://wiki.mises.org/wiki/Great_Depression#cite_note-Folsom_spending-55