A private corporation like the Fed would have no interest in operating such a system without the profit motive. The Treasury could default on the debt brokered by the Fed and replace it with a constitutional monetary system, but if it established a fractional reserve/fiat system, inflation worse than ever would result, just like with the Continental after the Revolutionary war or the Greenbacks after the Civil War. Fractional reserve by definition is a constant expansion of the monetary supply that translates into currency depreciation and then price inflation.
Money must be convertible into a tangible asset or it is unsound. Paper fiat will always return to its intrinsic value: zero.
No comments:
Post a Comment