Should the Federal Reserve be Nationalized and Fractional Reserve Banking Ended?

1.   A Bill introduced in Congress on 17 December "to  end the current practice of fractional reserve lending " has been enthusiastically welcomed by the American Monetary Institute as "a crucial and heroic step to resolve our growing financial crisis and achieve a just and sustainable money system for our nation."   The proposed Act will be called the "National Emergency Employment Defense Act of 2010."   In many ways it and its purposes resemble those of the  Proposed Bank of England Act, 2010.

2.   At the American Monetary Institute's recent Annual Conference, Prof Kaoru Yamaguchi of the Doshisha Business School in Kyoto, Japan, gave a paper titled "On the Liquidation of Government Debt under A Debt-Free Money System -- Modeling the American Monetary Act."

It "demonstrates how the government debt could be liquidated, without cost, under an alternative macroeconomic system of debt-free money that is proposed by the American Monetary Act.   Finally, it is proposed that a debt-free macroeconomic system is far superior to the debt-burdened current macroeconomic system in a sense that it can not only liquidate government debt, but also attain higher economic growth."

Recent signs of the coming banking reform in the UK

1.   An  Independent Commission on Banking   An Independent Commission on Banking set up by the UK Coalition Government in June 2010

Unfortunately its terms of reference don't specifically include the root question: who should create the national money supply?

However, that point has been taken up in the  important paper , "Towards a Twenty First Century Banking and Monetary System", submitted jointly to the Commission in November by Positive Money, the New Economics Foundationand Prof Richard Werner, Director of Banking, Finance and Sustainable Development at Southampton University.

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