...snip...
I guess there isn't a problem if we don't mind going through the entire local-bank-panic-so-merge-with-another-bank-over-and-over-again-until-it-becomes-a-behemoth-cartel-composed-of-very-few-members-that-hijacks-the-government-and-turns-everybody-into-debt-slaves cycle all over again
Lots of people borrow to their credit limit and rely on the repo man to provide them with motivation. You could even argue that some countries like to borrow right up to their credit limits and then only start to work. That's the way capitalism works - no amount of math will change that. I appreciate that you'd like people not to behave that way but its the way things are.
I'm risking being chastised by myrkul because im going to dis on a free market, but i don't know how else to explain this.
I'm not talking about joe shmoe borrowing past their credit limit or even a government borrowing past its credit limit, although this debt slavery is fairly inevitible with free market FRB run amock through its full cycle.
I'm saying if you have a free market providing FRB services, which produces usable money in the form of notes and accounting entries on reserves, the vendors in this market who happen to be idiots or unlucky or victims will issue too many notes and suffer panics on reserves and therefore become absorbed or merged or bought by another FRB.
This process happens over and over and over and over until there are only a very few big players with all the reserves all pooled up in just a few places. They then cartelize. When a cartel in something as important as creating the money supply gets big enough, it starts influencing the government.
We've run the whole gamut with this already from Andrew Jackson days to 1913 when the cartel was made the official true monopoly in the form of the FED, continuing until now, where the government is pretty much a total tool of this cartel.
It happened in Europe in pretty much every country. It happened in the US. You can't deny it. It cannot not happen again if we start all over again with the same system.