Our current problems with currency & the economy is not the direct problem of the federal reserve, but that is where the currency dilution began, in America. The fed was created to allow increased fractional reserve banking, remedy bank runs, & encourage bank savings, instead of gold buried in a fruit jar in the back yard. That was a noble concept, but it opened the door for expansion via debt, rather than production. People could borrow, invest, work the system, & become fabulously wealthy, without producing anything. It is ponzi scheme parameters.. skimming off each new 'investment' until the bubble bursts. ..and it ALWAYS bursts. The great depression, though exacerbated by the dust bowl & drought, was primarily caused by a bursting bubble.. the stock market crash of 1929.
When the fed was restrained by the gold standard, it could not expand its power or control over the currency by increasing debt. That was why FDR ended it in 1933, to keep the fed solvent, as people were converting their savings to gold, instead of buying federal reserve notes. It was govt mandating the use of their currency, to control the people & the economy (or so they thought). That is a typical tactic of statist systems.
I'm not singling out the fed, nor am i condemning fractional reserve banking, as it has been around for centuries. And while i agree that a moral people make laws less necessary, simple, fair laws, with a system of checks & balances is more difficult to corrupt. A central banking power, with no public accountability, but has control over the currency of the nation, is NOT a good system, & needs to change. Here are a few things we can require for a central bank:
1. oversight by elected officials.. congress is responsible to spend money, they should be responsible to provide a stable currency.
2. Hard assets.. something solid to base the currency on.. gold, silver, oil, land.. improvements.. even military hardware or national parks.. but a basis for the currency, not some ginned up numbers reflecting a fake gdp.
3. Limits on fractional reserve banking. .. a minimum requirement of assets to loans, so banks do not loan irresponsibly, or just borrow cheap money from the fed to loan out.
4. Money created from actual production.. no Quantitative easings 'just because', or 'for the children!' If the productivity of the nation did not grow, neither should the money supply. This would cut down on inflation, & lessen the impact of corrections, which will always happen.
5. balanced budget. this is mostly related to the fed, & is not a direct currency issue, but if the govt can borrow for future spending, they will, for votes. It compounds the problems of the currency. If the govt was required to keep a balanced budget, they would have more motivation to keep a stable currency.
Some form of bankruptcy has been around for centuries. Perhaps you were sold into indentured servitude for your debts, or all your assets taken to cover them. There was also 'debtors prison'. That was the 'bite' in borrowing.. you had to be sure you could pay it back. Banks & money lenders were also under those laws, & if they went under, they often took others with them. 'Caveat Emptor' was always the rule of the day for investing in any bank or savings plan ..even life insurance or mutual funds.
But the feds policies removed the threat of default from the banks. They could overextend themselves, & loan more than they had fractional assets to cover, & the fed would bail them out! That's why gold didn't work. There was more money being 'created' by the lending process than was actually justified by production, so any jitters in the market would spell an end to the system.. it would crash unless it could 'create' more money by fiat.. which is what they did. It had no basis in production, but was simply 'declared'.
IOW, the system is corrupt by default.. but it is almost imperceptive. It SOUNDS good, & promises lots of benefits, like most ponzi schemes. But its basis is in dilution, not production, which is why it is failing, & seems to be out of control.
I have come to see this as THE most crucial issue of the day, & one that will have the most impact on everyone. The politicians cannot control the fed. They cannot stabilize the currency, because it would cause a collapse of the system. It would take years of austerity, from both the people & the govt, to bring us to a solvent financial state. Even though this would be best for our long term health as a nation, & future generations, i don't think it will happen. Each generation kicks the can down the road, hoping it will hold up for a few more years.