Panama has no central bank. It uses the US dollar as its currency and what inflation they have comes from our own central bank monetary policy.
Since there is no one to bail out banks they behave with prudence, or they go out of business. Just a small preview of a banking system without a central bank.
Congress can abolish the Federal Reserve system
but it will take an informed electorate to get there.
It will take awhile to fight a deeply rooted belief, however.
Karl Marx in the late eighteenth century saw the recurring boom and bust when the industrial revolution began. He and economists of the time figured the problem lies within the capitalist market economy itself and what was needed to correct it was massive government intervention.
So the idea of government intervention in the economy as necessary goes way back. It is like
a punch served at most American universities.
No one hardly ever question the idea because most drank from the same punch bowl.
The Scottish David Hume and Englishman David Ricardo figured out that the actual cause was the activities of an institution that arrived on the scene—banking.
