As I think about this, I would add another criticism. Inherently and by
design, reducing the money in circulation will be deflationary. As
banks “extinguish” money created ex nihilo, the value of money remaining
out and about will increase. This means that for all loans on the
books at every bank the actual cost of repaying them will rise
steadily.
Let us say, for example, that my monthly mortgage is
1000 pounds, for simplicity. I work 60 hours to make that much money.
Five years into this process, I may need to work 80 or 100 hours to make
that payment, for the simple reason that as buying power increases,
wages will likely decrease.
It is a truism that inflation helps
borrowers, a truism that, as you all have well pointed out, benefits
banks as well by disguising the fact that the money they are supposedly
“losing” as the money loses value was created from scratch in the first
place. Any return on nothing is infinite.
The converse, though,
is clearly true as well, and part of the reason that “deflation” per se
is so widely feared. It is why even as intelligent an economist as
Milton Friedman called for essentially the same thing being called for
here, which is to say moderate inflation, on the order of 3% or so. In
so doing, he was more or less drawing a lesson from history, with which
he was more familiar than virtually anyone.
But that history has
been uniformly one of fractional reserve banking, central banks, and all
the problems that go with it. What we need, in my view, is a
Capitalist Revolution, of the sort I have proposed.
We see any
number of wide eyed fanatics calling for the subversion of our economic
order in favor of one that is supposedly “rational”, being run, as it
will, by supposed elites, who will be well educated by books, and
educated not at all by life. Such experiments invariably end in the
eradication of basic freedoms of innovation, economic output, and even
speech and movement. Since freedom is necessary for the development of
coherent moral structures, socialism is inherently a vicious and morally
vacuous ideology.
My proposal is radical. I grant that. But it
is logical, and it offers the potential for large change, generalized
social benefits, and INCREASES in freedom and self determination, all
while protecting the weak. I will submit it again:
http://www.goodnessmovement.com/Page23.html