Mish has an excellent post arguing that fractional reserve lending (i.e. our Federal Reserve system) is fraudulent and ought to be terminated. I wholeheartedly agree and urge you to read his post.
Here is his conclusion:
"The central point in a free market based banking system is to avoid violations of property rights. However, the current system of 100% fractionally reserved banks allows money to be created out of thin air robbing savers, by making those savings worthless over time. A pernicious effect of this system of permanent inflation is that it creates malinvestment and large boom-bust cycles that destroy wealth.
The Fed is a failed institution. Fannie Mae is a failed institution. Freddie Mac is a failed institution and fractional reserve lending is a fraud.
The correct policy decision is to abolish all of them, not to add layer after layer after layer of regulators watching over other regulators, who in turn watch over still other regulators, where some "god-like" super-regulator at the top supposedly has infinite wisdom and knows exactly how to regulate."