Irving Fisher (1867-1947) was a famous professor of economics at Yale University, who adopted a mathematical approach to resolving economic problems. He is well known for his utility theory, which juxtaposed the measurability of the utility function to demand theory. In his treatise, The Theory of Interest, he observed the changes in the value of goods relative to changes in time and interest rates. This later became known as the Quantity Theory of Money. Throughout his life he was active in the eugenics movement.
In March 1913 Senator Robert L. Owen, chairman of the Senate Banking Committee, tried to introduce an alternative bill to the fraudulent Rothschild/Rockefeller[231] banking and currency proposal. The bill would have allowed for the inclusion of staple commodities as part of the monetary base, in addition to gold and silver and would thereby have prevented the possibility of either inflation or deflation, and would have created true freedom of employment. Irving Fisher assisted Owen in the drafting of this bill, but was subsequently blackmailed into withdrawing his support.
The following illuminating paragraph extracted from Emmanuel Josephson’s The “Federal” Reserve Conspiracy & Rockefellers “Their Gold Corner” describes what transpired.
“The conspirators determined to block the adoption of the Owen bill. They had Prof. Fisher summoned before the Yale officials and confronted with the charge that he was so ‘foolish’ as to advocate money based on commodities other than gold. He was warned, related Sen. Owen, that there would be no place at Yale, or in any other university, for anyone so ‘foolish’. Prof. Fisher was keenly aware of the side on which ‘his bread was buttered’; and was no more principled, unfortunately, than are the multitude of ‘professors’ prostituted to the conspirators and their foundations. He succumbed to the conspirators’ blackmail, double crossed Sen. Owen and withdrew his professorial support of the honest remedial bill that he had helped draft. In its place, Prof. Fisher announced his advocacy of what he mockingly labeled a ‘commodity’ dollar the value of which was to be determined by a ‘gold index’, that would block stabilisation of the economy by making speculative the value of commodities, of gold and of the dollar, and would enhance the power of the conspirators to manipulate, or ‘manage’, the economy to enable them more readily to swindle the nation. The coup de grace was given to Sen. Owen’s honest, stabilizing currency and banking bill by its flat and categoric rejection by Pres. Wilson.” [232]
Having relented after his previous betrayal of Senator Owen’s efforts to amend the Currency and Banking Bill, in 1920 Fisher published a book Dollar Stabilisation,[233] which contained what later became known as the Chicago Plan.[234] The plan was privately issued as a six page memorandum and distributed to 40 individuals on 16 March 1933. It advocated that the state should create the nation’s money supply and that private banks should operate as full reserve banks. Using mathematical principles, Fisher was able to prove that full employment would be the result, business cycles would be abolished and inflation would be reduced and remain at zero.
In August 2012 two researchers at the International Monetary Fund, Jaromir Benes and Michael Kumhoff produced The Chicago Plan Revisited. They found that every one of Fisher’s findings was 100% correct. Their conclusion is cited in full.
Professor Irving Fisher’s Chicago Plan of 1933, which proposed full reserve banking, was endorsed by researchers from the International Monetary Fund in 2012.
“This paper revisits the Chicago Plan, a proposal for fundamental monetary reform that was put forward by many leading U.S. economists at the height of the Great Depression. Fisher (1936), in his brilliant summary of the Chicago Plan, claimed that it had four major advantages, ranging from greater macroeconomic stability to much lower debt levels throughout the economy. In this paper we are able rigorously to evaluate his claims, by applying the recommendations of the Chicago Plan to a state-of-the-art monetary DSGE[235] model that contains a fully micro-funded and carefully calibrated model of the current U.S. financial system. The critical feature of this model is that the economy’s money supply is created by banks, through debt, rather than being created debt-free by the government.
“Our analytical and simulation results fully validate Fisher’s (1936) claims. The Chicago Plan could significantly reduce business cycle volatility caused by rapid changes in banks’ attitude towards credit risk,it would eliminate bank runs,and it would lead to an instantaneous and large reduction in the levels of both government and private debt. It would accomplish the latter by making government-issued money, which represents equity in the commonwealth rather than debt, the central liquid asset of the economy, while banks concentrate on their strength, the extension of credit to investment projects that require monitoring and risk management expertise. We find that the advantages of the Chicago Plan go even beyond those claimed by Fisher.
One additional advantage is large steady state output gains due to the removal or reduction of multiple distortions, including interest rate risk spreads, distortionary taxes, and costly monitoring of macro-economically unnecessary risks. Another advantage is the ability to drive steady state inflation to zero in an environment where liquidity traps do not exist, and where monetarism becomes feasible and desirable because the government does in fact control broad monetary aggregates. This ability to generate and live with zero steady state inflation is an important result, because it answers the somewhat confused claim of opponents of an exclusive government monopoly on money issuance, namely that such a monetary system would be highly inflationary. There is nothing in our theoretical framework to support this claim. And as discussed in Section II, there is very little in the monetary history of ancient societies and Western nations to support it either.”[236]
[231] The Rockefellers are descendants of German, possibly Jewish immigrants, who originally spelt their name Roggenfelder. During the Middle Ages, because Jews were not considered to be part of the general citizenship, they were compelled by the German princes to include the suffix of an inanimate object in their surnames. Hence -berg (mountain), -stein (stone) etc.
[232] E.M. Josephson, The “Federal” Reserve Conspiracy & Rockefellers, Their “Gold Corner”, Chedney Press, New York, 1968, 51.
[233] A.N. Field, op.cit., 169.
[234] Fisher was aware of the advantages of money issued publicly, free of debt and interest, at the local level in Europe. In Stamp Scrip, Adelphi Publishers, New York, 1933, he devotes Chapter IV to The First Experiments Abroad: Silvio Gesell. Gesell introduced the Wara (Ware und Währung – Goods and Currency) paper money successfully into the depressed coal mining town of Schwanenkirchen, Bavaria. In Chapter V: The Sudden Spread of ‘Scrip’ he describes how stamp scrip transformed the depressed town of Wörgl, Austria into a flourishing centre of prosperity.
[235] Dynamic Stochastic General Equilibrium.
[236] IMF working paper, August 2012. https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
Stephen Goodson
A History of Central Banking and the Enslavement of Mankind
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