Video: What it means to end Central Bank (Should we end the FED?)

In the following video, GMU Professor Lawrence H. White explains what it means to end the FED. (Certainly not the end of the world)

From Learn Liberty: (hat tip Zero Hedge)

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.

Video: Free Banking 101

From LearnLiberty.org (hat tip Zero Hedge) 

What would happen if we didn't have a central bank? Prof. Lawrence H. White explains that private banks would be able to circulate money by issuing notes and checks redeemable for coin. Trustworthy banks would make arrangements to accept each other's notes and checks. Banks would have better incentives than the federal government to ensure their currency retained its value, because if it didn't, people would bank elsewhere. By contrast, central banks controlled by the government are able to devalue currency as they see fit and can even quit redeeming notes for coins of real value if they want to do so. It sounds like social-science fiction, but there are numerous real-world examples in history of successful free-banking systems. In fact, central banks arose largely because governments wanted an institution willing and able to lend them money with easy terms, not because of any problem with the free-banking system. Free markets offer the most efficient system for allocating goods and services, and money is no exception. As failures among central banking systems mount, it is time to reconsider the alternative of free banking.

Video: Lawrence White On Free Banking, Gold Standard and Central Banking

GMU Professor Dr. Lawrence White speaking at a monetary conference at the Cato Institute deals with free banking, the Gold Standard Banking and Central Banking. (hat tip: Tom Palmer)