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Does The Constitution Call For A Public Banking System?

Is it possible the founding fathers envisioned a public banking system where the Congress coins, issues and regulates while the States run the banks? Consider the following two excerpts from the constitution:

Section 8 - The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

The Tenth Amendment:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

Now consider the words of Thomas Jefferson:
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."

Most people think private enterprise is always the better choice. But I ask, aren’t we currently suffering from the very effects of "private banking" that Jefferson tried to warn us about? Could a public banking system where the congress issues the currency and the states run non-profit banks actually be what the founding fathers envisioned? It would after all:

1. Eliminate the "private" Federal Reserve and it’s undue influence
2. Eliminate the enormous profits of "private banks" that transfer wealth upwards via the fractional reserve system.

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"The Bank of Canada is the nation's central bank. We are not a commercial bank and do not offer banking services to the public. Rather, we have responsibilities for Canada's monetary policy, bank notes, financial system, funds management. Our principal role, as defined in the Bank of Canada Act, is "to promote the economic and financial welfare of Canada."

The Bank was founded in 1934 as a privately owned corporation. In 1938, it became a Crown corporation belonging to the federal government. Since that time, the Minister of Finance has held the entire share capital issued by the Bank. Ultimately, the Bank is owned by the people of Canada. "

Great...

let's have the nice politicians and bureaucrats force a monopoly currency on us (that they can inflate at will).

The FED, a private bank has usurped the government

and the FED must be ended. Restore the issuing of money to the people by having a government that is for the people and by the people. Restore the constitution. Then the people will be in charge of issuing money through their elected representatives in the senate and congress.

Congress should print only as much money as there is gold to back it up. Otherwise the nation builds debt and the dollar is devalued. Congress needs to make regulations that the state banks must follow to avoid this current situation. Banks cannot be allowed to issue or create money, as the FED has been doing. Only the government can PRINT money. Ron Paul suggests governments live within their means and not overspend or over print money.

Thomas Jefferson
"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 (printing of money) should be taken from the banks and restored to the people (their elected government), to whom it properly belongs."

Doesn't the Constitution say

no printing of money - only gold and silver?

Why not allow private free-market money?

I don't trust government to monopolize money. Whether they monopolize it or the government-linked Fed does, there's no substantial difference.

By the way, that alleged Jefferson quote you gave there is fake.

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The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

Right now a private

bank is printing money and flooding the market with no input from the people by elected representatives.

Banks should just be like any other business, subject to rules and regulations in a free market. BUT no bank should be allowed to print money. Only the government should be allowed to print money and only if all representatives of the people agree, and if there is gold to back it up. . The only money banks should have is what they get from people by way of money saved or invested.

Even if the quote is a FAKE, it is still a good quote, and true.

That is monetary-statism

Only the government should be allowed to print money and only if all representatives of the people agree, and if there is gold to back it up.

Someone has to print money

and it should not be a private bank. At least the people can speak through congress and of course there has to be rules and regulations carefully crafted to avoid abuse of power, such as the constitution might provide..

How is the Fed private

if it has a government-granted monopoly on printing legal tender? That twists the meaning of private. A private business, in the true sense of a private sector business, does not have government protection from competition. Dr. Paul is for competition in money. The way to have that is to allow the private markets to create money.

Whether it's the government controlling interest rates and money supply or the Fed with a government-granted monopoly, there is no difference, whether you want to call one private and one public. It's the same effect - central planning of the money supply. Why would it work any better if you just change who the central planner is?

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The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

Socialism?

and it should not be a private bank.

Why? Don't your prefer capitalism to socialism?

At least the people can speak through congress and of course there has to be rules and regulations carefully crafted to avoid abuse of power, such as the constitution might provide..

Are you saying there exists better checks and balances in government then thru marketplace competition?

There are worse alternatives to Fractional Reserve Banking

What if banks lended all the deposits on hand? The money supply would really explode. Requiring a limit on what can be lent is actually better.

If all fractional reserve was outlawed and banks could only lend their money and not depositor money then say good bye to interest earning accounts. In this type of system you would have to pay a fee to store your money at the bank. There would be no incentive to save with bank deposits.

The current system limits the amount of money (bank money and deposits) that can be lent by requiring a minimum reserve of cash. This is better than no limits. But to be pure about no fractional reserve banking then there would be not many banks and less savings. Might as well put it in a mattress.

Banks

Banks would provide security, profit sharing, and ease of transactions. They could lend all of what they had on hand, if the borrower defaulted it would put them in a hole, needing more depositors would drive them to give better customer service. They would be much more careful about their lending standards. Giving out risky loans would put that bank out of business and make the other banks more careful. Banks would be forced to be more responsible and so would the people. The money would simply be changing hands from the depositor to the bank who lent it to the person who borrowed it and then to whomever they spent it with (no monetary inflation). Yes the depositor could ultimately lose a portion or all of their money, maybe they need to find a more reputable bank and do a little more research. Again responsibility. Loans would still provide profits and people could share those profits providing another incentive. Much better than a wave of bank failures with no accountability and government and banking tyranny don't ya think?

"The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.", www.mises.org

"Endless money forms the sinews of war." - Cicero, www.freedomshift.blogspot.com

Many people think the fractional reserve system should be

abolished including RP who calls it a ponzi scheme.

It is largely responsible for the current crisis as well as the transfer of wealth upwards. The fact is, if people really understood it they would not participate. It's existence primarily relies on people's lack of understanding.

Why would

Why would the states or the federal government need to control banks? If we had honest money the banks would just be warehouses like any other business and they would be regulated by their customers either using them or not. Lending strictly from their reserves and making money through additional services. In transactions between each other (banks) in the transfer of gold would check each other for honesty. Fractional Reserve lending is fraudulent and open to the worst forms of abuse. Decentralized banking is what was intended, fractional reserve is the opposite. It inevitably forms "pyramids".

"The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.", www.mises.org

"Endless money forms the sinews of war." - Cicero, www.freedomshift.blogspot.com

Well apparently the Founding Fathers gave the authority

to regulate the value of the coinage to the Congress (the people) because they thought it would work better than being controlled by private interest.

However I agree with you that banks could just be warehouses if we had honest money - that would work great. But a state owned bank could operate as a non-profit.

In reality

In reality the Congressional money should be competing with private money as a check on it's inflation. Any currency which was not "honest" would be abandoned including government money if it became inferior. I assume the founders figured this check would be done by the people themselves through congress, but did not forsee the people losing all grasp on the understanding of money. As prices are driven down by better technology there is always the temptation of whomever the power center is to "stabilize" the price by inflating, securing an additional hidden tax which will inevitably grow yet be not easily noticeable by the public. That's why there must always be a check and the avoidance of a "power center".

"The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.", www.mises.org

"Endless money forms the sinews of war." - Cicero, www.freedomshift.blogspot.com

I like the idea of competing currency however

it looks like the constitution gives only the Congress the right to coin money - Quote:
The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures. So I'm not sure where the competing currency comes from?

Please enlighten us!

You have to understand that

the Constitution does not place limits on what the people can do. If you want to create your own private money, the Constitution doesn't stop you. The Constitution places limits on government, not on the people.

If you want to prohibit private entities from creating money, then you're not for a free society.

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The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

That's what I see too

It does not state that they have the "sole" monopoly on the creation of money. Just says they have the authority to coin it..

"The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.", www.mises.org

"Endless money forms the sinews of war." - Cicero, www.freedomshift.blogspot.com

Otherwise,

we need to send the Feds down to Disney World to confiscate the Disney Dollars.

-------
The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

That's a fake quote from Jefferson.

There's no record of him saying that. Someone made it up and it's been going around on the internet.

Jefferson was not a banking socialist.

In what way is the Federal Reserve private? In no substantial way. Why would Congress setting the interest rates be any better than the Board of Governors setting the interest rates? A truly private banking industry, interest rates would be set by neither, but rather the market.

-------
The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

If you don't understand how the Federal Reserve is

private, you have a little reading to catch up on. Of course only being here 4 weeks I can understand.

Peace, it'll come to you!

Apparently you can't explain

what is substantially (as opposed to legally) private about it.

How could a private institution have a coercive monopoly on the production of money and setting of interest rates? Obviously it exists by force of the government. So to say it's "private" is a bit of a stretch.

-------
The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

Speak as you wish but to say the Federal Reserve is not

owned by private banks, you are really exposing your lack of understanding.

You might start with this video:
http://video.google.com/videoplay?docid=-7065177340464808778

You don't know what it means to be

a "private" business. It means you weren't created by the government, and exist in the market without government protection from competition, the government doesn't choose who is going to head your company, and don't have your profits funneled to the government's Treasury.

Yes the Fed is LEGALLY private, but it's not substantially private. It's acts as an arm of the government. It's silly to call it private.

-------
The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

Ok, start a thread of your own

proposing that the Federal Reserve is not private and see what kind of response you get. I can assure the people on the Daily Paul will enlighten you. Expose your ignorance if you like, it's a free country!

I'm sure I would be attacked.

Because there's a lot of misinformation, myth, and conspiracy theory around here than is commonly accepted.

That fake quote from Jefferson you've been posting is a case in point.

-------
The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

As a general rule,

People who have only been members for 4 weeks are not aware of the collective learning curve that has proceeded them on this site. Plus the blatant lack of understanding coupled with condescension is typically looked upon as a sure sign of a troll who's lack of credibility is easily recognized and dismissed.

Peace to you!

You can count me out of your

collective misinformation curve.

Most of the people on this site do not inform, but misinform.

You're a case in point, trying to claim Jefferson is for a socialized banking system, replete with a fake Jefferson quote.

-------
The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul