IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01830363.html
   My bibliography  Save this paper

The 100% money proposal and its implications for banking: the Currie–Fisher approach versus the Chicago Plan approach

Author

Listed:
  • Samuel Demeulemeester

    (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The literature on the 100% money proposal often reveals some confusion when it comes to its implications for the banking sphere. We argue that this can be partly explained by a failure to have distinguished between two divergent approaches to the proposal: the "Currie–Fisher" (or "transaction") approach, on the one hand, which would preserve banking; and the "Chicago Plan" (or "liquidity") approach, on the other hand, which would abolish banking. This division among 100% money proponents stemmed, in particular, from different definitions of money, and different explanations of monetary instability. The present paper attempts to clarify this divergence of views.

Suggested Citation

  • Samuel Demeulemeester, 2018. "The 100% money proposal and its implications for banking: the Currie–Fisher approach versus the Chicago Plan approach," Post-Print hal-01830363, HAL.
    • Handle: RePEc:hal:journl:hal-01830363
    DOI: 10.1080/09672567.2018.1435706
    Note: View the original document on HAL open archive server: https://hal.science/hal-01830363
    as

    Download full text from publisher

    File URL: https://hal.science/hal-01830363/document
    Download Restriction: no
    File URL: https://libkey.io/10.1080/09672567.2018.1435706?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Diamond, Douglas W & Dybvig, Philip H, 1986. "Banking Theory, Deposit Insurance, and Bank Regulation," The Journal of Business, University of Chicago Press, vol. 59(1), pages 55-68, January.
    2. James W. Angell, 1935. "The 100 Per Cent Reserve Plan," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 50(1), pages 1-35.
    3. Clark Warburton, 1949. "The Secular Trend in Monetary Velocity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 63(1), pages 68-91.
    4. Mr. Michael Kumhof & Mr. Jaromir Benes, 2012. "The Chicago Plan Revisited," IMF Working Papers 2012/202, International Monetary Fund.
    5. Reinard Schuessler & Robert W. Dimand, 1999. "Correspondence," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 223-225, Winter.
    6. Henry C. Simons, 1936. "Rules versus Authorities in Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 44(1), pages 1-1.
    7. L. Randall Wray, 2024. "Modern Money Theory," Springer Books, Springer, edition 3, number 978-3-031-47884-0, February.
    8. Allen, William R, 1993. "Irving Fisher and the 100 Percent Reserve Proposal," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 703-717, October.
    9. Charles J. Whalen, 1988. "The Minsky-Simons Connection: A Neglected Thread in the History of Economic Thought," Journal of Economic Issues, Taylor & Francis Journals, vol. 22(2), pages 533-544, June.
    10. Charles A. E. Goodhart & Meinhard A. Jensen, 2015. "A Commentary on Patrizio Lainà's 'Proposals for Full-Reserve Banking: A Historical Survey from David Ricardo to Martin Wolf'," Economic Thought, World Economics Association, vol. 4(2), pages 1-20, September.
    11. Ronnie Phillips, 1992. "The 'Chicago Plan' and New Deal Banking Reform," Economics Working Paper Archive wp_76, Levy Economics Institute.
    12. G. Russell Barber Jr., 1973. "The One Hundred Percent Reserve System," The American Economist, Sage Publications, vol. 17(1), pages 115-127, March.
    13. Glasner, David, 2017. "Rules versus discretion in monetary policy historically contemplated," Journal of Macroeconomics, Elsevier, vol. 54(PA), pages 24-41.
    14. Laidler,David, 1999. "Fabricating the Keynesian Revolution," Cambridge Books, Cambridge University Press, number 9780521641739, September.
    15. Lauchlin Currie, 2004. "The 100 percent reserve plan: August 12, 1938," Journal of Economic Studies, Emerald Group Publishing, vol. 31(3/4), pages 355-365, September.
    16. James Tobin, 1987. "Financial Intermediaries," Cowles Foundation Discussion Papers 817, Cowles Foundation for Research in Economics, Yale University.
    17. A. M. Neuman, 1937. "100 per cent. Money," Manchester School, University of Manchester, vol. 8(1), pages 56-62, June.
    18. William J. Barber, 2005. "Irving Fisher of Yale," American Journal of Economics and Sociology, Wiley Blackwell, vol. 64(1), pages 43-55, January.
    19. Maurice Allais, 1987. "The Credit Mechanism and its Implications," Palgrave Macmillan Books, in: George R. Feiwel (ed.), Arrow and the Foundations of the Theory of Economic Policy, chapter 18, pages 491-561, Palgrave Macmillan.
    20. Albert G. Hart, 1935. "The "Chicago Plan" of Banking Reform: I A Proposal for Making Monetary Management Effective in the United States," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 2(2), pages 104-116.
    21. Goodhart, Charles & Jensen, Meinhard, 2015. "Currency School versus Banking School: an ongoing confrontation," LSE Research Online Documents on Economics 64068, London School of Economics and Political Science, LSE Library.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samuel Demeulemeester, 2024. "The case for 100% money: Ten reasons for separating money issuance from banking," Economic Affairs, Wiley Blackwell, vol. 44(1), pages 57-70, February.
    2. Samuel Demeulemeester, 2022. "What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms," Working Papers hal-03751756, HAL.
    3. Demeulemeester, Samuel, 2024. "Investigating the “Debt-Money-Prices” Triangle: Irving Fisher’s Theoretical Journey Toward the 100% Money Proposal," SocArXiv tfm6v, Center for Open Science.
    4. Samuel Demeulemeester, 2020. "Would a State Monopoly Over Money Creation Allow for a Reduction of National Debt? A Study of the “Seigniorage Argument” in Light of the “100% Money” Debates," Research in the History of Economic Thought and Methodology, in: Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought, volume 38, pages 123-144, Emerald Group Publishing Limited.
    5. Sylvie Rivot, 2020. "Information and Expectations in Policy-Making: Friedman's Changing Approaches to Macroeconomic Dynamics," GREDEG Working Papers 2020-39, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    6. George S. Tavlas, 2024. "On the Controversy over the Origins of the Chicago Plan for 100% Reserves: Sorry, Frederick Soddy, it was Knight and (Most Probably) Simons!," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(6), pages 1573-1594, September.
    7. Samuel Demeulemeester, 2021. "The 100% money proposal of the 1930s: an avatar of the Currency School’s reform ideas?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(4), pages 577-598, July.
    8. Samuel Demeulemeester, 2022. "Divorcing money creation from bank loans: revisiting the “100% money” proposal of the 1930s [Dissocier la création monétaire des prêts bancaires : retour sur la proposition "100% monnaie"," Post-Print hal-03938669, HAL.
    9. George S. Tavlas, 2020. "On the controversy over the origins of the Chicago Plan for 100 percent reserves," Working Papers 279, Bank of Greece.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Samuel Demeulemeester, 2021. "The 100% money proposal of the 1930s: an avatar of the Currency School’s reform ideas?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(4), pages 577-598, July.
    2. Brett Fiebiger, 2014. "‘The Chicago Plan revisited’: a friendly critique," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(3), pages 227-249, December.
    3. Samuel Demeulemeester, 2022. "What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms," Working Papers hal-03751756, HAL.
    4. Moe Thorvald Grung, 2013. "Control of Finance as a Prerequisite for Successful Monetary Policy: A Reinterpretation of Henry Simons’ “Rules versus Authorities in Monetary Policy”," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 261-276, April.
    5. Samuel Demeulemeester, 2022. "Divorcing money creation from bank loans: revisiting the “100% money” proposal of the 1930s [Dissocier la création monétaire des prêts bancaires : retour sur la proposition "100% monnaie"," Post-Print hal-03938669, HAL.
    6. Josh Ryan-Collins, 2015. "Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935-75," Economics Working Paper Archive wp_848, Levy Economics Institute.
    7. Michele Fratianni, 2017. "It is time to separate money banks from credit banks in Italy," Mo.Fi.R. Working Papers 138, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    8. Patrizio Lainà, 2015. "Proposals for Full-Reserve Banking: A Historical Survey from David Ricardo to Martin Wolf," Economic Thought, World Economics Association, vol. 4(2), pages 1-1, September.
    9. David Laidler, 2010. "Chicago Monetary Traditions," Chapters, in: Ross B. Emmett (ed.), The Elgar Companion to the Chicago School of Economics, chapter 6, Edward Elgar Publishing.
    10. Samuel Demeulemeester, 2020. "Would a State Monopoly Over Money Creation Allow for a Reduction of National Debt? A Study of the “Seigniorage Argument” in Light of the “100% Money” Debates," Research in the History of Economic Thought and Methodology, in: Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought, volume 38, pages 123-144, Emerald Group Publishing Limited.
    11. Degens, Philipp, 2013. "Alternative Geldkonzepte - ein Literaturbericht," MPIfG Discussion Paper 13/1, Max Planck Institute for the Study of Societies.
    12. Al-Jarhi, Mabid Ali, 2004. "Remedy For Banking Crises: What Chicago And Islam Have In Common: A Comment," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 11, pages 24-42.
    13. Tavlas, George S., 2021. "A Reconsideration Of The Doctrinal Foundations Of Monetary Policy Rules: Fisher Versus Chicago," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(1), pages 55-82, March.
    14. Pfister Christian, 2020. "The 100% Reserve Reform: Calamity or Opportunity?," Working papers 786, Banque de France.
    15. Krainer, Robert E., 2017. "Economic stability under alternative banking systems: Theory and policy," Journal of Financial Stability, Elsevier, vol. 31(C), pages 107-118.
    16. Soldatos, Gerasimos T. & Varelas, Erotokritos, 2014. "The Chicago Tradition and Commercial Bank Seigniorage," MPRA Paper 57721, University Library of Munich, Germany.
    17. George S. Tavlas, 2020. "On the controversy over the origins of the Chicago Plan for 100 percent reserves," Working Papers 279, Bank of Greece.
    18. Köhler, Ekkehard & Kolev, Stefan, 2011. "The conjoint quest for a liberal positive program: "Old Chicago", Freiburg and Hayek," HWWI Research Papers 109, Hamburg Institute of International Economics (HWWI).
    19. A. Stevens, 2017. "Digital currencies : Threats and opportunities for monetary policy," Economic Review, National Bank of Belgium, issue i, pages 79-92, June.
    20. Braun, Benjamin, 2016. "Speaking to the people? Money, trust, and central bank legitimacy in the age of quantitative easing," MPIfG Discussion Paper 16/12, Max Planck Institute for the Study of Societies.

    More about this item

    Keywords

    Chicago Plan; Lauchlin Currie; banking; 100% money; Irving Fisher;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01830363. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.