This is ludicrous, the fact that he would say that this would impose “costs” on the banking system by requiring them to at least hold some cash or treasuries on the books really shows where he stands.   Its with the banks #1 and not the American people which he should be serving along with having a healthy banking system.

Without reserves their would be no real accountability and would have to restraint in making loans which in fact would issue credit that is basically currency in the Federal Reserve System.  Why is it bad to impose a cost on the banking system?  Are they somehow better than us all and should be able to make money without any restraints and can basically decide who wins and loses in our market base economy by choosing who will get loans and who will not.  This is DANGEROUS.  I would say almost down right treasonous in its ability to subvert important control in our society.

Up until now, the United States has operated under a “fractional reserve” banking system.  Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest.  But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says ”impose costs and distortions on the banking system”. At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve’s own website….

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system?  Not that we are operating with sound money now, but is the solution to have no restrictions at all?  Of course not.

Analysis: Here are the true of our Federal Reserve System and where they want to take us.  If we let this happen, the republic will truly be dead and a form of corporate fascism will take hold with a financial oligarchy at the head of the pile.  No matter who you pray to or not, god help us.

This is a very serious solution and a growing and very real problem.  Representative Mike Pitts has put a Bill (H. 4501) forth that would ban U.S. federal reserve notes (dollars) as legal tender in the state of South Carolina.  It may just be symbolic because of the massive deficit spending.

Since the federal reserve was established in 1913, the U.S. dollar has experienced a continued de-valuation by the issuance of more currency than has been required over the last 97 years.  This solution may be a little extreme but with the amount of spending and unfunded liabilities, it may be time to send a message that something needs to be done.

South Carolina Rep. Mike Pitts has introduced legislation that would mandate that gold and silver coins replace federal currency as legal tender in his state.

As the Palmetto Scoop first reported, Pitts, a Republican, introduced legislation this month banning “the unconstitutional substitution of Federal Reserve Notes for silver and gold coin” in South Carolina.

In an interview, Pitts told Hotsheet that he believes that “if the federal government continues to spend money at the rate it’s spending money, and if it continues to print money at the rate it’s printing money, our economic system is going to collapse.”

“The Germans felt their system wouldn’t collapse, but it took a wheelbarrow of money to buy a loaf of bread in the 1930s,” he said. “The Soviet Union didn’t think their system would collapse, but it did. Ours is capable of collapsing also.”

Analysis: The winds are changing about our dollar system and if we want to have no real constraint in the about of currency being issued and if we are okay with constant inflation no matter what and never allowing deflation or real corrections in the economy without some knee-jerk reaction from the congress.