The problem does not lie whether or not the banks are public, private, or central. The real problem is when any financial institution ‘creates’ money based on limited fractional reserves. If you research the follow panics in the United States, you will find the following common thread is: Banks willing to lend fractional reserve money to highly speculative endeavors, be it land, railroads, dot.com, homes, gold, etc. The United States Government has not followed the Constitution that only “Congress has the Power: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”. It is the Government, we the people, that have given up that power to the banks. Gov’t has done it in the past in a smaller scale. And more recently, in a greater scale with the adoption of the Federal Reserve System. I think you will find that during these panics the government did not ‘regulate the Value’ of money. Rather, the Government allowed banks to increase the money supply by fractional reserves on highly speculative endeavors because the Gov’t reaped taxation benefits. Eventually, the speculation could not sustain itself, collapsed, and cause severe damage not only to the speculators, but the country as a whole.
Panic of 1819
Panic of 1837
Panic of 1857
Panic of 1873
Panic of 1893
Panic of 1901
Panic of 1907
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)
3rd president of US (1743 – 1826)
