But let's put it aside and start with basics without involving lending. What RBD theory indicated has nothing to do with FRB, it is this part I am most interested in this thread
You are right, these are two different subjects.
I think the RBD is a system that is slightly better than "just printing money", for two reasons. The first reason is that "just printing money" is too openly evident. People wouldn't trust the ministery of finance that prints *directly* dollar bills. It wouldn't seem fair. The seigniorage is too evident and visible.
Yes, with the world "backed by assets xxx", people will not question the credibility of those fiat money
I think all of these strange problem is rooted from this "issuing money" action. There is only one way to stop any kind of seigniorage, e.g. no one is allowed to issue money backed by anything, money must be produced just like any other commodities and goods/services
Comparing two cases:
1. you use gold coin to buy a beer, and after you drink it, you have nothing left
2. you use gold coin as collateral and issue a paper note, and use that paper note to buy a beer, after your drink it, you still have the gold coin, especially when economy is expanding and there is a lack of paper note, you might never receive a redeem request and you can even issue another paper note to spend again
So, when you issue paper notes backed by gold, you can issue much more money to spend due to not all of the people will redeem the gold with paper note (In fact, in today's system, only FED have the right to take back paper notes and sell assets). Now this is back to the practice of fractional reserve banking, so FRB and RBD infact are closely related practices, once you follow the RBD theory to issue money, the next step will be FRB