Should We End the Federal Reserve?

Professor White concludes that the Federal Reserve is not necessary. Evidence shows that nations can survive without a central bank.

Lawrence H. White

Lawrence H. White is an Economics Professor at George Mason University who teaches graduate level Monetary Theory and Policy. He is considered an authority on the history and theory of free banking. His writings support the abolition of the Federal Reserve System and the promotion of private and competitive banking.

What would it mean to “end the Fed”? Professor Larry White says that in order to know the effects of such a measure, we must first understand the role of “the Fed”.

The Federal Reserve is the central bank of the United States and the institution at the center of the nation’s monetary and banking systems. It has five main functions, including controlling monetary policy. Could the United States even survive without the Federal Reserve?

In order to answer this question, Professor White examines countries throughout history that did not have an established central bank, including Scotland, Sweden, Switzerland, and Canada. Hong Kong, he points out, still does not have one. So who performs the functions of a central bank in these countries?

Professor White cites private institutions, including clearing house systems, banks, and financial companies, as the main actors in the monetary systems of countries without a central bank. Ultimately, Professor White concludes that the Federal Reserve is not necessary. Evidence shows that nations can survive without a central bank. What the Federal Reserve does well can be done even better by private institutions, and the institution is capable of serious errors.

For more, visit Learn​Lib​er​ty​.org.

[Watch more: What Is Free Banking, and Why Should I Care? featuring Lawrence H. White]