Summary: What would it mean to “End the Fed?” Free banking expert and professor Lawrence White begins his answer by explaining the functions of the central bank of the United States, also known as the Federal Reserve or just “the Fed.” As the hub of the nation’s monetary and banking systems, the Fed plays five main roles: 1. Coordinating fund transfers between banks 2. Issuing paper currency 3. Regulating commercial banks 4. Acting as “lender of last resort” 5. Controlling monetary policy Given that the Fed currently carries out these critical tasks, can we really abolish it? Professor White thinks so. He names several flourishing economies have operated without a central bank. Hong Kong, for one, hums along central bank free. What allows these economies to thrive without central bank regulation? Professor White examines a variety of private institutions including clearing house systems, banks, and financial companies that perform the tasks we assign to the Fed (and, according to White, outperform the Fed by a long shot). Professor White concludes the Fed does more harm than good and recommends that we send it the way of the dinosaurs if we want to fend off future financial crises.
