100% Money

by Irving Fisher

" The 100% proposal is the opposite of radical. What it asks, in principle, is a return from the present extraordinary and ruinous system of lending the same money 8 or 10 times over, to the conservative safety-deposit system of the old gold-mints, before they began lending out improperly that was entrusted to them for safekeeping. It was this abuse of trust which, after being accepted is standard practice, evolved into modern deposit banking. From the standpoint of public policy it is still an abuse, no longer an abuse of trust but an abuse of the loan and deposit functions.England effected a reform and a partial return to the goldsmiths' system when, nearly a century ago, the Bank Act was passed, requiring a 100% reserve for all Bank of England notes issued he-yond a certain minimum (as well as for the notes of all other note-issuing banks then existing).Professor Frank D. Graham of Princeton, in a statement favoring the 100% money plan, says of President Adams that he "denounced the issuance of private bank notes as a fraud upon the public. He was supported in this view by all conservative opinion of his time."Finally, why continue virtually to farm out to the banks for nothing a prerogative of Government? That prerogative is denned as follows in the Constitution of the United States (Article I, Section 8): "The Congress shall have power ... to coin money [and] regulate the value thereof." Virtually, if not literally, every checking bank corns money; and these banks, as a whole, regulate, control, or influence the value of all money.Apologists for the present monetary system cannot justly claim that, under, the mob rule of thousands of little private mints, the system has worked well. If it had worked well, we would not recently have lost 8 billions out of 23 billions of our check-book money.If our bankers wish to retain the strictly banking function—loaning—which they can perform better than the Government, they should be ready to give back the strictly monetary function which they cannot perform as well as the Government. If they will see this and, for once, say "yes" instead of "no" to what may seem to them a new proposal, there will probably be no other important opposition. "

Genres: Economics

312 pages, Hardcover

First published January 1, 1935

About the author

Irving Fisher was an American economist, inventor, and social campaigner. He was one of the earliest American neoclassical economists, though his later work on debt deflation has been embraced by the Post-Keynesian school.
Fisher made important contributions to utility theory and general equilibrium. He was also a pioneer in the rigurous study of intertemporal choice in markets, which led him to develop a theory of capital and interest rates.[4] His research on the quantity theory of money inaugurated the school of macroeconomic thought known as "monetarism." Both James Tobin and Milton Friedman called Fisher "the greatest economist the United States has ever produced."
Fisher was perhaps the first celebrity economist, but his reputation during his lifetime was irreparably harmed by his public statements, just prior to the Wall Street Crash of 1929, claiming that the stock market had reached "a permanently high plateau." His subsequent theory of debt deflation as an explanation of the Great Depression was largely ignored in favor of the work of John Maynard Keynes. His reputation has since recovered in neoclassical economics, particularly after his work was revived in the late 1950s and more widely due to an increased interest in debt deflation in the Late-2000s recession. Some concepts named after Fisher include the Fisher equation, the Fisher hypothesis, the international Fisher effect, and the Fisher separation theorem.

Reviews

[Toma · Rating 4 out of 5]

Even though monetary system has changed, from traditional fractional reserve system to endogenous money, is this book very much topical. Fisher explains in fairly simple terms why full reserve banking is superior compared to the one we have now. Recently (2012) also IMF researchers tested Fishers claims with a DSGE model and it supported Fishers views (a Japanese professor Kaoru Yamaguchi had already earlier created a system dynamics model which came to same conclusion).

[Dina · Rating 5 out of 5]

It gets slightly technical but the main premise is this: instead of managing economy with debt that tends to increase when time are good (speculative bubbles) and decrease when times are bad (depressions, contractions) - we should manage economy with REAL money. Equity not debt.

[Ni · Rating 3 out of 5]

I read this book while working on my PhD combining the paradigms of viable monetary stock emissions with Good Governance, and asking whether or not a viable and sustainable currency could also be issued in a Democratic way. My conclusions, as I recall (based more on Silvio Gesel and Keynes perhas than Fisher, see my book: SHARED MONETARY GOVERNANCE: Exploring Regulatory Frameworks, Participatory Internal Decision-making and Scale in Institutional Access to General and Special Purpose Currencies for details in the bibliography on my synthesis of Fisher, Keynes, Gesell and Olin-Wright's work...

[Rommel Harlequin Monet · Rating 4 out of 5]

I proposed this exact same idea in an email to George Soros (he didn't reply) before I even discovered this book.

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From: (Rommel Monet)
Sent: Thursday, April 16, 2020 7:43 PM
To: 'George.soros@soros.com'
Subject: if JPM's $8 billion reserve for losses is way too low



And the true number would wipe out JPMs entire retained earnings account… have the Fed buy all of JPMs $2.7 trillion of assets (consisting of the IOUs of its customers), issuing JPM 2.7 trillion freshly printed green dollars for them.

The Fed’s assets rise in step with its liabilities, so there is no inflation (initially). If the IOUs fall in value, (because, for example, the credit card customers of JPM stop paying), the losses will be revealed in the form of inflation (on real bills principles).

Meanwhile, JPM is transformed into a 100% reserve bank instantly. Do this with all the big 4.

See:


https://web.archive.org/web/201503031...

best,

(Rommel) - [not Sproul]

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https://cdn.mises.org/100%20Percent%2...