The Chicago Plan

The Chicago Plan, proposed in the 1930s by economists like Milton Friedman and Henry Simons, aimed to reform the banking system to prevent financial crises. It suggested that banks should hold 100% reserves against deposits, meaning they wouldn’t be able to lend out deposits but instead keep all customers' money safe. This would eliminate bank runs and increase financial stability. Additionally, it proposed creating money through government spending rather than private banks, focusing on public control to enhance economic stability and prevent future depressions. The plan remains a topic of discussion in modern economics regarding monetary reform.