Again, yes the money supply increases and money is being "created out of nothing". I've mentioned the money multiplier before and first referenced to it when you made your awesome suggestion. However, what you fail to see is that that money has value because it has an interest. In addition, all the deposits exist in the balance sheets of the banks. It doesn't magically spring into existence.
Inflation does not simply mean the increase of money supply... It means the decrease of the value of money over time. In FRB, the money creation doesn't affect inflation since the money created has similar value than the existing money stock and GDP increases when the investments made on this money increase. When you print money however, no value is added, therefore inflation increases.
I would very much like to hear the states that are using this method you're suggesting and give practical examples how it works please instead of simply saying that that is what we should do.
It does seem to be what you're suggesting, just replace the people buying the flat with governments paying off trade deficits. If it's not, please elaborate much more specifically, I'm actually genuinely interested.
Money does not have value because of interest. That's a ridiculous claim unsupported by reality and common sense.
The system allows banks to take one billion and loan out 10 billion. Very hokus pokus...
There is a well established correlation between an increasing money supply and inflation in the long term.
There's no reason why public bank cannot make investments that benefit GDP growth.
There's no intrinsic reason why democratization of the monetary system must result in hyperinflation, or even more inflation than the current, inflationary system. It completely depends on how you manage it. The heart of the issue is whether the money power should be firmly in the control of a private cartel or under democratic oversight, serving the public.
According to a study by the budget commite of the Missouri house of representatives, a state bank could cut their budget deficit in half. North Dakota has a state bank that gives practically interest free loans for state infrastructure projects (studies have shown that interest composes 30-50% of public projects), low interest rates in general and helps keep profits in the state and in the public interest.
The state deposits its tax revenues in the Bank, which in turn ensures that a high portion of state funds are invested in the state economy. In addition, the Bank is able to remit a portion of its earnings back to the state treasury . . . . Thanks in part to these institutional arrangements, North Dakota is the only state that has been in continuous budget surplus since before the financial crisis and it has the lowest unemployment rate in the country.
In contrast, California is the largest state economy in the nation, yet without a state-owned bank, is unable to steer hundreds of billions of dollars in state revenues into productive investment within the state. Instead, California deposits its many billions in tax revenues in large private banks which often lend the funds out-of-state, invest them in speculative trading strategies (including derivative bets against the state’s own bonds), and do not remit any of their earnings back to the state treasury. Meanwhile, California suffers from constrained private credit conditions, high unemployment levels well above the national average, and the stagnation of state and local tax receipts. The state’s only response has been to stumble from one budget crisis to another for the past three years, with each round of spending cuts further weakening its economy, tax base, and credit rating.