Please critique this - what would happen if
Enough notes were printed to pay off entire national debt
Banks absorbed the increased money supply by increasing their reserve ratio to 100%
If this was done gradually, there would be no net increase in the money supply and hence no inflation - comments? I am also assuming the national debt = amount loaned out on reserve banking ratio by banks.
No increase in the money supply because banks increased their reserve ratio? What about the 10 Trillion dollars created? That’s inflation.
Do you think that we could just hit the “reset” button and have everyone be forgiven on their debts and we could pick up at a fresh start? An economy does not work that way. If you have car payments that means you still have not fulfilled your promise to contribute products/services to the economy to reimburse those who made that car for you. The creditors will loose while the debtors will be rewarded. Do you think no one will ever default on debt again? Besides, inflating the money supply to confiscate wealth in this fashion is immoral. Why not just persuade all the creditors to forgive all the loans made with their money. Look at your bank account balance now and divide your balance by 10. You keep 1/10 of your money and give up 90% of the rest. Then you have forgiven all the debtors that borrowed your money through your bank. Then we’re all even. Printing money to forgive all the debts is essentially the same thing. For today’s given money supply there isn’t enough goods/services in the economy to fulfill all the demand if we were all to take out our all our money and spend it today. Most of the money supply was created by debts. IOU’s that promise to make products/services in the future to back up that money - to make something that all this money can buy.
If there is to be 100% reserves and no fractional reserve banking anymore then we don’t need the Federal Reserve. End the Fed, liquidate all the assets and get the Fed to forgive all its US gov’t bonds that it holds. Then back all the existing dollars by the gold held by the Fed & Fort Knox.