Source...The Swiss Consider a National Referendum on Fractional Reserve Banking
This is a very convoluted process, but when one drills down to its essence, the Fed and the commercial banks are arguably giant counterfeiters. In this light, it is completely understandable that so many people reject the current system and seek to replace it with something seemingly more democratic.It’s here where the modern Greenbackers go awry. Recognizing the absurdity of allowing bankers to issue new money, and then lend it to the government (taxpayers) at interest, the Greenbackers want to cut out the middleman. They want the government to reclaim control of the printing press—which of course need not even “print” money in this age of electronic financial transactions—and to issue new money whenever its spending exceeds its revenue. This would still be inflationary and raise prices (other things equal), to be sure, but modern Greenbackers argue that at least the taxpayers wouldn’t be shackled with a national debt hanging over them, requiring massive transfers just to pay interest each year.To repeat, this cure could be worse than the disease. The fundamental danger is that an unchecked power to issue new money might prove too tempting for political officials, who would seek to curry favor with the public through various spending programs that were “paid for” through a general rise in prices. Yes, the present system is indeed absurd, but at least citizens understand—however vaguely—that massive government budget deficits will ultimately prove painful. This recognition, as well as the procedural requirement of periodically raising the formal debt ceiling, at least puts some brake on the growth in federal spending.