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The Futility of Banking Reform

Written by Gary North on January 22, 2013

Gary North’s Reality Check (Jan. 22, 2013)

The largest banks are immune to reform or regulation. They control the Federal Reserve System, and have since the beginning in 1914, when it opened for business. The Congress defers to the FED. So, the banking system never changes much. There is never a significant reform.

Today, the 12 largest U.S. commercial banks hold 69% of the deposits. If you think the free market produced this allocation, you are the victim of a Keynesian economic theory. The centralization continues relentlessly. All the “democracy” chatter in Congress is simply a form of self-delusion.

Woodrow Wilson, the so-called reformer, signed the Federal Reserve Act of 1913, passed in the final hours before the Christmas recess. He signed it within two hours after the Senate passed the bill.

The fix was in.

The fix has been in ever since.

There are three main approaches for banking reform: the Austrian approach (end the FED: the free market precious metals coin standard), the monetarist approach (reduce bank regulation: automatic fiat money), and the Greenback approach (bank nationalization: fiat money). None of this is likely until after Washington defaults.


Richard Fisher is the president of the Federal Reserve Bank of Dallas, a privately owned regional central bank that operates under the monopoly-granting authority of the United States government. This year, he is a member of the Federal Open Market Committee (FOMC). The FOMC is described as follows on the website of the Federal Reserve System, a government agency.

Fisher is the FOMC’s lone monetarist. He is a disciple of Irving Fisher (no relation), the Yale University economist whose monetary theories were adopted by Milton Friedman. Friedman called him America’s greatest economist. In a previous article, I have argued that Irving Fisher was a true crackpot. He was a racist. He was a leading eugenicist. He believed that science could be used by the government to reverse the negative effects of mentally and morally inferior races that reproduce more rapidly than whites do.

Richard Fisher wrote this laudatory recommendation of Irving Fisher’s monetary theory.

During the first quarter of the 20tth century, Irving Fisher was one of America’s most celebrated economists. But sadly, most Americans today have not heard of him. Even as his reputation among the public faded with the years, his reputation within the economics profession has steadily risen. Fisher (no relation to the undersigned, though I would like to claim access to his gene pool) was a pioneer in many theoretical and technical areas of economics that today are the foundation of central bank policy. One such achievement was the creation of indexes to measure average prices, the bedrock for all current monetary policy.

Ludwig von Mises in The Theory of Money and Credit (1912) spent many pages refuting Fisher’s monetary theories. I can do no better than to parrot Richard Fisher: “But sadly, most Americans today have not heard of him.”

Fisher was correct when he said that Irving Fisher’s reputation has been restored among professional economists. I have described this rehabilitation as an aspect of academia’s war against free market money.

Richard Fisher was a vocal opponent of Ron Paul.

(For the rest of my article, click the link.)

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4 thoughts on “The Futility of Banking Reform

  1. now what would the chances be that our group of 535 nitwits that have the power to reform banking actually would reform banking laws that they directly benefit from as they are

  2. Texas Chris says:

    I have heard of Fisher because I read Mises. This is the only fruitful means of exposing oneself to Fisher.

  3. Why not just have the US Treasury issue "United States notes" that do not accrue interest (which can't ever be paid back anyway) and spend or give the money into circulation? All society needs is enough currency to transact its business and keep the economy going. It's the debt that began when that first Federal Reserve note was borrowed and spent that has been our undoing.

  4. Public_Citizen says:

    The promoters of the Ponzi Scheme known as the Federal Reserve System will insist that there is no going back to an [honest] monetary system until the system inevitably fails. They will still insist that there is no going back right up to the moment the door slams on their jail cell. Only then will reality set in.
    Meanwhile society once again gets stuck holding the bag.