By Gary North
''As we shall see, the author calls for pure fiat money, issued by the government. His proposal features 100% reserve banking, but it explicitly denies any need for a gold standard. The money supply would be controlled by the government. In short, we can trust the government to manage the money supply. Here is what Henry Simons proposed in 1934.
100 per cent reserves, simply could not fail, so far as depositors were concerned, and could not create or destroy effective money. These institutions would accept deposits just as warehouses accept goods. Their income would be derived exclusively from service charges – perhaps merely from moderate charges for the transfer of funds by check or draft. . . . These banking proposals define means for eliminating the perverse elasticity of credit which obtains under a system of private, commercial banking and for restoring to the central government complete control over the quantity of effective money and its value.''
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