Inflation under the plan to Democratize Money by Monetizing Citizens? NO WAY!

I sent a copy of my book to an old college friend months before I published it https://www.amazon.com/Democratize-Money-Monetize-Citizens-Proposal-ebook/dp/B0756RQRPG He was concerned about inflation under my proposal to have the Fed put new money (give) into adult citizen’s bank accounts. However, inflation would not be a problem that the Fed could not deal. There were less than 208 million adult citizens in the US in July of this year. The Fed held over $17 trillion in debt. If the Fed thought doling out money to the citizens in monthly or biweekly installments created a bubble (too much) money) and stimulated inflation they could sell the debt instruments they hold to contract the money supply by as much or more as the new money in the hands of citizens created. During the first year Fed deposits into citizen accounts would amount to (rounding up) $4.982 trillion (including new money the governments will get. The feds hold more than three times that in debt instruments they could sell. So, there is absolutely no reason for a surge in inflation caused by too much money entering the system given the Fed’s resources (which are in debt so it is strange to call them resources, but that is finance) to manage the money supply.

Yes there are, theoretically different cause of inflation. So, pick out one and then we can examine the tools that are used to combat it. In all cases it is a matter of psychology (Greenspan used to call it jawboning), open market operations (buying and selling debt instruments), reserve ratios (the percent of a bank’s depositors accounts it can lend) and what they call the window (the rate at which the Fed allows banks to borrow). None of the Fed’s tools are changed by my proposal. So they can still manage the money supply in the ways they have learned over the years.

Footnote: I did not cit my sources for numbers. I did that on purpose. This way a reader has to look them up on their own. I always felt more comfortable checking other people’s numbers when I could find them on my own. But to give you a hint, I googled two questions: how many adult citizens live in the US? And, How much debt does the Fed hold?

 

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4 thoughts on “Inflation under the plan to Democratize Money by Monetizing Citizens? NO WAY!

    1. While I present in an American context, any nation or collection of nations could do this as I presume they all have rather large debt structures supporting their money supplies. Converting would not be a piece of cake, but rather a bloodless revolution that no one would notice except for the tax free money in their pocket books.
      Warmest regards, Theo

      Liked by 2 people

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