Some folks, including Mr. Pietsch (whose “Another point of view” appeared in the Dec. 8 issue of the Town Crier), encourage support of H.R. 2990, which would eliminate the Federal Reserve System and fractional reserves for banks.
Those parts of H.R. 2990 are bad ideas.
Those who want to cure the ills of our present system by abolishing the Federal Reserve and fractional reserve banking should review the history of money and banking in the United States prior to the Federal Reserve Act.
It is not a pretty story.
Do we really want to go back to the old scheme with Congress directly controlling the monetary system?
I am not fond of banks, but I would certainly rather have my money in the hands of a well-regulated banking system, insulated from politics, than in the hands of the politicians that inhabit the U.S. Congress.
If we abolish fractional reserve banking, what mechanism do we put in its place to allow the money supply growth to match growth of the economy?
HR 2990 (NEED Act) lets Congress determine the amount of money in circulation. (This has to be a joke … what is the real plan?)
If you are thinking about eliminating the Federal Reserve, be careful what you wish.
Representative Dennis Kucinich (D-Ohio) has many good ideas, some of which we support, but an economist he is not.
Congress sets the rules for the Federal Reserve System. Banks with “national” in their name and state charted banks that meet the requirements own the Federal Reserve. Each has a percent ownership as prescribed by law.
The president, with the approval of the Senate, appoints the majority, seven, of the twelve member Board of Governors of the Federal Reserve System. Member banks select the rest. Their fourteen-year terms are staggered.
I do not generally support private ownership of public institutions, but the Fed is an exception.
It has worked well for nearly 100 years.