Yes, the present system works well. Having said that, the present system has structural vulnerabilities that are totally unnecessary. Every central bank/fractional reserve banking system has eventually failed, and destroyed a lot of wealth of anyone foolish enough to have assumed such failure could not have occurred.
We could say that the construction of homes in Bam, Iran works well, having housed people for centuries. But compare the engineering standards and construction practices between there and in California and you will see a big difference. We could choose one construction system or the other, but we choose to have a system that minimizes vulnerabilities.
In 2003, a Richter 6.6 earthquake near Bam, Iran, leveled about 70% of the city, killing some 80,000 people. In 1989, a magnitude 6.9-7.1 earthquake struck Loma Prieta, California, killing 57 people.
In Bam, it was reported that “the collapsing mud-brick structures had completely disintegrated and buried people in piles of earth, rather than trapping them in voids or air pockets between building slabs...” [1]
One of the reasons we choose to have the present banking system is that it facilitates deliberate inflation of the currency, as well as allowing the government to profit from asset inflation by taxing income defined in nominal dollars.
This is just a sophisticated way for government to seize private wealth without having to formally pass the levy in the form of a legal tax.
Worse, it sets in place a system that, just like the mud brick construction of Bam, has a known track record of failure. Indeed, the financial system failed in the 1930’s to such an extent that Roosevelt had to close all the banks for a few days. In historical terms, that is not that long ago. It was within the lifetime of my father.
We could have a system that is far sounder, a system that fully carries out the essential functions of banking (lending, borrowing, savings, demand deposits, etc.), but has none of the same vulnerabilities. But this is very unlikely because government is addicted to inflation, and the banking system is addicted to being able to create money out of thin air.
Yes, I keep some of my wealth in the form of dollars and even some of them in the bank. I even invest in some of the money factories. But I am ever-alert for the signs of stress that if taken to an extreme, signal a risk level that becomes to high for me.
Once again, for the record.
Every central bank/fractional reserve banking system has eventually failed,
Can't that be said for every banking system that's been tried, including the ones backed by metal?
We could say that the construction of homes in Bam, Iran works well, having housed people for centuries. But compare the engineering standards and construction practices between there and in California and you will see a big difference. We could choose one construction system or the other, but we choose to have a system that minimizes vulnerabilities.
Obviously, Iran needs to convert its banks into bookkeepers.
When I study the Great Depression or the Panic of 1837, what I see as the biggest problem was a lack of liquidity. The greatest capability, though not automatic, of our current system is being able to add liquidity in a time of crisis. Look at what happened after 911. The Fed added liquidity that led to a short term recovery.
Perhaps you don't like that. Perhaps you are pulling for a total financial collapse so you can go around bragging about your gold holdings as everyone else is breaking out their fishing poles and hunting rifles so they can survive.
LOL! Except for the ones that exist today.