Thanks for the thoughtful post.
But,
1)the US dollar is also backed in a non-trivial sense by the world's largest economy, not to mention the military presence worldwide. Every time there is US action the dollar gains from flight to safety. That's horribly expensive. Why create more expense for US taxpayers by issuing trillions in bonds... The dollar is safe and reliable, even if subject to inflation, as long as that inflation isn't excessive in the minds of the investors.
2)the gov't debt burden is a proxy for excessive spending, but what I'm exploring are questions why there isn't simply the substitution of gov't issuance of payment for gov't purposes, without consequent issuance of bonds. Yes, that creates inflation to the extent receipts fall short of expenses. However, it's an "honest" accounting that monetizes expenses immediately, rather than debt which gets deferred and lied about (a la Nixon's famous "the national debt is metaphysical concept and doesn't matter" type statements, or regular self-interested administration calculations about future revenues paying off current excesses). The calculation of increased money supply by gov't is subject to immediate unambiguous calculation, rather than used-car-salesman approaches of "the meaning of long-term debt", which is easily obfuscated and of uncertain effect.
3)agreed, the banks need a regulatory system, but the gov't is the responsible party to excesses and deceptive accounting, and using the Fed exclusively allows a too-easy conduit for creating such debt
4)as far as profits to the banks, the question there is whether this system defined as exclusively regulatory is in fact a source of significant profit to the member banks. If so, it's not likely to be an easy number to determine, for obvious reasons of self-interest, but for the same reasons should be reexamined, especially after 90 years.
5)"far more accountable than the pre-Fed system" isn't an issue. These days we should have a web page in realtime showing the expenditures of every public dollar and program, with debt and inflation calculations of current and proposed actions, and impact on every citizen in the country, posted daily. (OT, but there should be added felony penalties for public officials who knowingly lie about disposition of funds, and a similar crime for any gov't funds to be covertly used in the public media.) |
