No, No , No in so many ways,
I'm sure the gen Y would argue differently,

But , with a cashless society and you allowing the ATO to give you a yearly statement, it would be a HUGE cost to Australia. By ATO current standards of 80% correct, 20% mistakes and 40% of funds are spent collecting the other 60%. This would mean employing thousands of extra public servants and for what?

The black market will always survive. You can deal in drugs with goods and services (and call it pro bono)

What cost would my son or daughter have to bare if I wanted to give them $10 for doing their chores? A ATO run cashless society I would estimate at least $3 of that $10, and for what? To employ another leech on society, another drain on income by employing another public servant, who's only claim in life is being incompetent?

Our Aussie dollar is the fourth most traded currency in the world, that gives us POWER and additional income on the world stage. A cash less society weakens are bargaining power with our trading partners.

I know eventually we will have a cashless society as socialist governments will see the benefit of extra tax revenue and more public servants who will vote for them.

BUT, I hope that day is many years away

Excellent Idea. In a cashless economy, supported by smart cards, the black economy just couldn't exist!

Moreover, the tax collection methodology could be limited to a simple unavoidable expenditure tax, which simply couldn't be avoided, the object of the black economy.

Nor would it still be possible to hide money/income, courtesy of this or that foreign location; given in order to access this income; it'd need to go through a national account; to get onto your smart card!

And or, there'd be automatic questions raised by the program, if it noted you seemed to be able to travel frequently, without seeming to pay the fare!?

I mean the travel agency or shipping line, what have you, might have a smart card telling a very different story to a mainframe capable of deducing the comparable/cross referenced facts at light speed!

For mine, a simple expenditure tax costing less than the current cost of avoidance/minimization, would take all the reasons for avoidance out of the game; and indeed, all the unproductive parasites who alone, benefit from the current complexity!

Better those number crunching talents be used productively in a brand new franchised poeples' bank; and an excellent place to put all the new surpluses we'd create, just by dint of ending both the black market and its constant companion, endemic tax avoidance!

Besides, we need something better than a conga line of foreign investors,just to put some far more affordable venture capital in Australian hands!?
Rhrosty.

Currently it is possible for a parent to give a kid up to %10,000.00 a year GIFT, without that creating a tax problem for the kid; and you can squirrel even more in a specific use (i.e.,uni ed) family trust.

So the idea that a smart card would somehow disadvantage the kid, pure unadulterated humbug!

I mean, the kid could give you a multiple choice shopping list; but only if you're stupid enough to try to bribe them for normal good behavior!

Me I'd take something they value away from them until they understood that they are the (do as you're told) Kids and you are the responsible parent.

I could take my Kids anywhere and receive endless comments on how well behaved they were; and such a nice treat as opposed to the often out of control kids, acting up in order to get that bribe or sugar hit?

And yes, the end of too clever by half tax avoidance would likely see much more money in government coffers, and without having to lay out a single cent to put it there!

Meaning, as well as the avoided tax, they'd get to keep and use the 40% some say is the current cost to the government of current collection policy!

And lets not mention the additional 30% extracted by state duplication/unnecessary layer of double dip admin!?

As always, there will be a host of those with something to hide or gain, trying to obfuscate the issue with their usual garbage!?

Which sadly is all too often believed by the ever trusting gullible; and, who are invariably the ones endlessly making good all the avoided tax!
Rhrosty.

Terrible idea, based mainly on economic ignorance! A surplus would be extremely bad for the economy at the moment – what we need is a stimulus. A bigger government deficit would benefit many people much more than "cost carrying money", firstly because the government can spend the money on things that benefit the people, secondly because people would resent that intrusive tax, and thirdly because people would dodge it by trading in foreign currencies instead, slashing our dollar's value. And free trade is a good thing – we should be trying to abolish the GST, not broaden it.

The government issues the money and has various ways to influence its value, but has rightly left ultimate control of the value to the market. Having a centrally planned currency value would be terrible, as the government would have to then go against the nation's economic interest in order to maintain that value.

Your plan would destroy, not increase, sustainable stable prosperity.

BTW your Senate and UK hyperlinks don't work, though the Senator hyperlink appears to lead where the former should go.

Rhrosty: "Excellent Idea. In a cashless economy, supported by smart cards, the black economy just couldn't exist!"

While I do acknowledge that the black market would be severely reduced in size if we went cashless, you would never get rid of it completely. The reason why is because anything that has value (as perceived by those involved in a trade) can be used as currency.

eg, Did you know that organised crime gangs have been known to use stolen art/antiques/wine as currency for large large payments? (as-an-aside: I've often wonder howthis works, especially with respect to the art because you would never be able to sell it on the open market-- so how do you agree what it is worth?). Beside this extreme example, more realistically they can also use foreign currency, companies shares (where the registered owner of the shares is a front), gold, etc.

For the case where it is not large sums and you need a frictionless, untraceable standand item to use as currency (eg: in the case of street dealing drugs), you can use pre-paid phone credit, gift cards, cartons of beer (or a single beer), cigarettes etc.

Additionally, you can just use plain of barter where there is no currency involved--- eg. you ignore the other candidates for this cushy government job and I'll have sex with you.

It is impossible to stop the black market outright.

Thinkabit points out some truths when he states that "anything that has value can be used as currency."
And why not?
I don't want anyone knowing my private business or transactions.
My trading endeavours are strictly a matter between me and the person with whom I'm dealing; untraceability is commensurate with privacy.
In any case, what's "black" about a black market?

Aldan thought it was a bad idea to have a surplus as this would not stimulate the economy. But Aldan must have missed reading the last line where I state that "cost-carrying money provides a compelling incentive to spend it rather than hoard it." In this way the economy is stimulated much more than deficit spending or quantitative easing.

So the surplus can be used to retire debt and the need to raise taxes.

Aldan also missed that the issue of cost carrying money was to build infrastructure to create jobs and/or pay welfare to reduce the need for taxes and debt!

Aldan suggestion of avoiding $A would not work as any conversion of $A or back again would be tagged and so identified.

Yes thinkabit; and while everything you say is probably true?
At some point someone is going to be left holding the parcel and wanting to turn it into legal tender, to buy a car, put a down payment on a house etc!

And a small black market may be tolerated and useful, if monitored to see what known/petty crims are still getting up to?

For mine the easiest non currency to explain away, has to remain casino chips!

And given these things can be controlled by possible untouchable criminal master minds, as is said to occur in (the house always wins) Vegas, the most difficult to uncover or prove any wrong doing!

I mean someone can be told to go to a particular high roller table and play a certain predetermined number of whispered in the ear combinations or routines, and seem to be on a winning streak for around dozen plays or hands?

Ditto some horse racing meetings, where a bookie marks your betting guide?

Who could prove anything but a serious winning streak and possibly carried out under the very noses of a dozen or more credible witnesses?

I'm sure we will never entirely eliminate the black market or the tax avoidance it supports?

All I'm suggesting is removing from inherently honest folk any possible credible reason to cheat on tax, given actually paying it, could be a cheaper option?

Anyway, what happens when thieves fall out and one gets even by shopping the other! Ditto after the divorce and a scorned woman out for revenge/a bigger share/custody of the Kids/whatever?
Rhrosty.

Shann, I admit that by punishing the public for saving your plan would be more stimulatory than deficit spending would normally be. There is of course no technical reason why deficit spending could not match that, but such a ridiculous amount would be very highly inflationary and certainly worth avoiding. By not being able to actively direct spending into depressed areas, your plan would actually be more inflationary than that.

Never mind about converting to another currency and back — once people convert their Aussie dollars to US dollars (for example) they'll keep them (as a much better store of value) and they'd soon become a more attractive currency for trading, making the Aussie dollar far less valuable.

Your solution to an imaginary problem would be a recipe for ruin.

No end to evil.

Such a monetary system already exists - in prisons.

So now that Big Brother admits his incompetence, that he has problems balancing his budget, we are all expected to suffer for his sake and be forced to use these filthy electronic devices just to survive and buy food.

Instead of pushing us into virtual existence away from being in touch with the real physical world, we should do away with Big Brother - it is time to close down this cancerous growth called "Australia" (the state, not the actual land and its people) so that ordinary people can live in freedom and peace on this continent.

Shann Turnbull makes no mention of the real black economy ie of Central Banksters and their minions creating our money as debt. It is legalised counterfeiting on a monumental scale which presently is destroying the economies of the planet.

Private Bankers should not be allowed to create money from nothing as debt.

I wonder if the author of the article has considered that it might even result in a larger black market if we went digital (personally, I think it most likely that it would shrink, but you can't be sure).

The reason why the black market might would become more attractive to your average citizen is because most people don't wont the government nor banks to know in detail all that they have ever bought. I know I wouldn't like it if the government knew exactly when, where and what I spend money on even though the stuff I buy is legal. I think it would push me enough to investigate other options like anonymity enhanced crypto-currencies instead of using Australian dollars.

"Aldan" has not carefully read my article when he states: "By not being able to actively direct spending into depressed areas, your plan would actually be more inflationary than that." It is the current system of fractional banking that allows credit to be created indiscriminately for non productive and speculative activities. I make is clear that self-liquidating negative interest rate money could be targeted for infrastructure and to replace welfare payments funded by debt or taxes.
"Arjay" likewise has missed the point that digital money removes fractional banking. It is no longer required. Negative interest rate digital money is anyway self-liquidating.
"thinkabit" concern about privacy is misplaced as digital currency could use the Bitcoin crypto technology. The promoters of Bitcoin in Australia suggested to the Senate committee hearing on Nov 26 last year that all Bitcoin purses be registered with the ATO. The ATO in any event can obtain access to private bank accounts.

Shann you did not say who would control this new digital currency. Bitcoin operates without banks and Govt control. These two powers are not going to let any new currency become mainstream without them having a huge say.

My view is that we diversify currency even more. Why not have a 1 oz silver coin that fluctuates in value according to market forces? People then could have a currency that appreciates in value. Max Keiser produced a digital Maxcoin which is backed by 1oz of silver.

You can have a currency backed by anything of worth,so long as there are rules stopping the rise of inflationary money which currently we don't have. The power of money creation should reside with the people. That is the very definition of democracy which we currently don't have.

Note;the HSBC has been busted many times laundering drug money. Afghanistan now produces 90% of the world's heroin under the rule of the USA. Those powers who really control the drugs are not going to eliminate cash as it will then reveal our real criminals.

Shann Turnbull, your article didn't say you'd curb banks' ability to borrow and lend profitably. Who would issue loans under your system? And what would their criteria for doing so be?

Anyway, even if we did also get rid of fractional reserve banking, my objection still stands. The government can of course target money anywhere, but with the dollar in freefall, they'd have a much stronger incentive not to spend it at all.

Your digital currency is an entirely bad idea. It would turn our economy into something like Argentina's, replacing our relatively stable currency with something that nobody will want to hold. That would effectively destroy the enormous benefit of currency sovereignty that our government currently enjoys.

Aidan quote "That would effectively destroy the enormous benefit of currency sovereignty that our government currently enjoys." Who are you kidding Aidan ? We create very little of our own money debt free.

Current cash rates for our banks from the Private US Federal Reserve is 2.25% which is almost 6 times the rates in the USA and GB. So our banks borrow at 2.25% and loan out at 5 to 6% with admitted inflation of 3%.The real rate of inflation due their money printing is like 6% or more.There is no way in the long term that our banks are making profits on mortgages. They are making money on derivatives which are 6 times the value of our mortgages. Banks are borrowing against our mortgages to gamble on derivatives. It is a gigantic bubble waiting to bring on the mother of all collapses.

No, Arjay, most of the bank's borrowings are not from overseas but from their own customers. They also tend to borrow a lot from each other. So although there's a strong argument that they're too reliant on foreign borrowing and we should make it easier for them to borrow from the RBA instead, your assumptions that the mortgage business isn't profitable are baseless. And you don't seem to understand the way banks actually use derivatives.

Aidan our banks have nowhere near enough deposits to inflate the property markets as the have now achieved. The normal fractional reserve ratio is that $1 of deposit can create $10 worth of loans. That ratio here and in the USA is now far greater. Fannie and Freddie May had ratios of 1:300. Most of the money being created in not going into productive enterprises. In the USA most goes into the shares and derivatives. Since 2006 US companies have borrowed $5 trillion to buy their own shares. The US Govt is now in $17 trillion debt equal to their GDP with unfunded liabilities over $100 trillion.

If our banks are so safe ,why did they pass "bail in" at the last G20 meeting in Brisbane? "Bail In" is the ability of banks to convert our deposits into their shares when they get into trouble. They did this in Cyprus. Here is the evidence. http://cecaust.com.au/bail-in/ Our banks are not safe since their derivative exposure has almost doubled since 2008.

Banks consider derivatives to be a form of insurance but how can your insurance policy be 6 times your assets? Derivative are just complex bets on markets going up or down. The share market has now detached from the real economy and is at an all time high.Derivatives debts must be honoured first and depositors come last.

nvestmentwatchblog.com / Submitted by IWB, on March 15th, 2015

"The US Federal Reserve has slammed the breaks on the German bank’s plans to raise dividends and buy back shares. The central bank says its US operations are too weak to survive another major economic crisis.

Fed tells Deutsche Bank US to reduce risk
The US divisions of Germany’s biggest bank failed a crucial stress test on Wednesday after the Federal Reserve in Washington deemed its financial foundation too weak to withstand a crisis like the one that threatened to crash the global economy in 2008.
The Fed faulted the capital plans of some 12 to 14 percent of Deutsche Bank’s US operations, saying they showed “numerous and significant deficiencies.”
For the second year in a row, the central bank also vetoed the US plans of Spain’s largest bank, Santander, pointing to “widespread and critical deficiencies” with regard to governance, planning for risks and other areas.
Santander and Deutsche Bank have $118 billion (111.1 billion euros) and $55 billion in assets in the US respectively.
Deutsche Bank offensive
For Deutsche Bank, it was the first US stress test since the Fed launched its review in 2009.
Reacting to the Fed’s objections, a Deutsche Bank spokeswoman in New York said the company had already recruited 500 employees and launched an investment offensive to the tune of 1 billion euros ($1.06 billion) meant to improve the shortcomings."

Even the big banks are buying their own shares. Our banks are 40% owned by HSBC, Citibank and JP Morgan. They are all connected.

Yet more nonsense, Arjay.

>>Our banks are 40% owned by HSBC, Citibank and JP Morgan<<

No, they are not. If you are going to post garbage like this, at least have the courtesy to declare your sources. I often wonder what is going through your head when you write such stuff, but for sure it has a great deal of space in which to move around.

>>Banks consider derivatives to be a form of insurance but how can your insurance policy be 6 times your assets?<<

You must surely realize by now that writing this kind of sentence - which you do on a regular basis - does nothing but shine the spotlight on your total ignorance of derivatives, their function, and the means by which they are measured. The only puzzle remaining is why you think it smart to show off your lack of knowledge. Are you looking for sympathy, perhaps?

>>If our banks are so safe ,why did they pass "bail in" at the last G20 meeting in Brisbane?<<

So the question is this: would you prefer the banks to be responsible for their own actions and activities, and to "bail-in" their shareholders, bondholders and customers when they are in trouble, or would you like the government to "bail out" the failing outfits instead? Does it not occur to you that "bail-out" arrangements, or the tacit understanding that they exist, would serve to encourage an even looser risk management regime?

If you knew that you could get the government to write off what you owe on your credit card, would you be a) more or b) less inclined to spend like there's no tomorrow?

>>The normal fractional reserve ratio is that $1 of deposit can create $10 worth of loans. That ratio here and in the USA is now far greater. Fannie and Freddie May had ratios of 1:300<<

Fannie May and Freddie Mac provide home loans. They don't take deposits from which to create loans, they secure the loan against property.

I am perpetually amazed at how little you actually research before you write, Arjay.

Commentators have noted that my article did not describe who would create money and the role of banks. These points and how a unit of value might be defined were omitted because of the word limit. They are discussed in my academic article whose link was missing at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2417826. To encourage discussion I will also use this article to identify 16 reasons why Australian money is not fit for purposed because:
1. It creates government debt instead of government assets;
2. Australians cannot control its value;
3. It has been overvalued in recent years closing down manufacturing and other industries to create unemployment;
4. It is impossible for the central bank to carry out its purpose: “to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people”;
5. It misallocates resources by creating misleading price signals;
6. Its value is not defined or determined by Australian sustainable resources;
7. Unlike Bitcoin it can earn interest;
8. By earning interest it creates a disincentive for investment in assets that increase productivity that however lose value by wearing out of possessing limited life like patents;
9. It increases inequality by making the rich richer from interest payments whether or not the money owner or the money necessarily increases prosperity;
10. It is not created by producers of wealth but mostly by bankers who consume a disproportion of wealth for their services;
11. It is not tagged like Bitcoin to stop its duplication;
12. Its creation is not limited like Bitcoin;
13. It allows a “black” economy to exist from the use of untraceable notes and coins;
14. It cannot be traced like Bitcoin to identify fraud, bribery, money laundering, profit shifting, tax avoidance, criminal activities or the funding of terrorists;
15. It does not incur a storage cost when not used like any real commodity used as money;
16. It does not inoculate the economy from internally or externally created financial crisis.
My short article on who should create money is posted at: http://www.ethicalmarkets.com/2012/06/14/who-should-create-money-and-credit

Shann, going through your 16 points:
1. Misleading. Government assets don't spontaneously appear; people work to create them and that requires money. Because we use interest rates to control the rate at which money is spent, it is sensible to regard the net amount of money our government creates as a debt, though ultimately this is just a matter of accounting convention.

2. This is true or false depending on what you mean by "control". Australia can not and should not maintain its value above or below the market value, but we can create the market conditions necessary to give us all the control over its value we need.

3. This shows a change of policy would be desirable, but it does not make it unfit for purpose.

4. False. It is possible, though it would require a change of policy.

5. Markets do that sometimes, but a centrally planned system would be even worse in that regard.

6. Not exclusively, but they are a factor that influences it.

7. This is an advantage not a flaw. It allows inflation to be controlled without having to resort to the use of fiscal policy. But it doesn't prevent us from using fiscal policy to control inflation, and there is a long term trade towards doing so.

8. Hardy. A limited life patent would be less sensitive to interest rates than something that lasts a century or more!

9. True! Therefore IMO we should gradually move towards a system of using fiscal policy to control inflation. However interest rates are low enough that I don't think it's currently a big problem.

10. Partially true. Money is created by lending to producers of wealth, and the role of banks does seem to be rather overvalued at the moment.

11. Irrelevant. Existing arrangements are sufficient to control the amount of money in circulation and prevent counterfeiting.

TBC

(continued)

12. This does not make it unfit for purpose; quite the reverse! Limiting its creation like Bitcoin would make it unfit for purpose because it would introduce a risk of the government running out of money, and it would remove the link between money creation and the needs of the economy.

13. A black economy will always exist if there's a perceived need for one.

14. Bitcoin is so difficult to trace that the point is moot.

15. This is a good thing. Incurring a storage cost would discourage people from saving it, and without people saving money the government would be unable to run a deficit except when there's an external surplus.

16. It enables the economy to withstand any internally or externally created financial crisis. Unlike your proposal which would CREATE an enormous internal financial crisis.

Your plan would send us the way of Argentina in a pathetic attempt to fix problems that are mostly imaginary.

From Shann's site "Today, governments define what is legal tender. However, governments create less than five percent of the money used in modern economies. Banks create more that 95% of the deposits. Customers use bank created deposits as a source of funds to lend to the government by buying its bonds.

The government then taxes its citizens to pay interest on the bonds. This practice is indefensible. It should be the other way around. It should be the government that creates money and lends it to the banks. The government would not then need to tax its citizens and could earn interest from the money lent to the banks."

Aidan you and Pericles can go and suck eggs. Shann agrees with me. It should be Govt that creates money and loans it too the banks

Rohsty, as Kirby quite rightly says, a cashless society would see a huge increase in horse trading

As it is I can sell $800 worth of fillet steak to the washing machine man for $100 and he can sell me an $800 washing machine for $100.

The amusing part is if it was dome often enough one could claim benefits from the ATO for loss of income. In fact, manynin business today do quite well yet still claim benefits simply due to undeclared incomes.

A finical transaction tax is what's needed and it's coming I would say.

Just for Pericles by Murray Hunter 11/3/13 OLO. Major shareholders in Aussie Banks.
http://www.onlineopinion.com.au/view.asp?article=14777 The NAB was 34% owned by these banks. This does not include all the other minor foreign shareholders in our banks.

Thanks for the reference Arjay. Proving only, of course, that you were, as always, inventing numbers in the first place...

>>Our banks are 40% owned by HSBC, Citibank and JP Morgan<<

And Shann might not thank you for this endorsement, given that your understanding of financial issues has much in common with a vacuum...

>>Aidan you and Pericles can go and suck eggs. Shann agrees with me.<<

Neither of you has made a cogent case for government controlling money. A concept that has more in common with the worst blindnesses of Soviet command-and-control communism than being useful in today's economy.

Sorry, there is an error in my response to Shann's point 15. Regardless of our external balance, the government would still be able to run a deficit. However it is likely that higher interest rates would be needed to control inflation if it did.

_____________________________________________________________________________________________

Arjay, why do you think I'd want to suck eggs? Shann agreeing with you should be enough to set off alarm bells! The government does create money and loan it to the banks (although not to a sufficiently great extent IMO. The banks also lend and borrow money from their customers and each other.

And even if the big Aussie banks were 40% owned by HSBC, Citibank and JP Morgan, this would not make them any more susceptible to the collapse of HSBC, Citibank or JP Morgan than if HSBC, Citibank and JP Morgan didn't own any of their shares at all.

Aldan
Your statement "The government does create money and loan it to the banks" demonstrate that you do not understand that it is the other way around!

It why I describe the current financial system as being back to front, upside down and inside out in my article on Democratising Money" posted by a London think tank at http://www.longfinance".net/index.php?option=com_content&view=article&id=828

I must thank you for providing evidence of how difficult it is for folk to take aboard how the existing system works. Also how difficult it is for folk to adopt new ways of thinking about fundamental beliefs and providing me the opportunity to share with others who may be a similar position.

Below are my responses to your comments on my sixteen points as to why the nature of Australian money does not economically, efficiently or effectively assist in creating a sustainable equitable society:

1. You have missed the point raised in my article that the US government would have created a $40 billion asset by issuing negative interest rate money;

2. The value of money can no longer be defined by any one or more goods or service and so it has become self-referential no longer connected to reality. I cannot accept that it makes any sense to allow an invisible hand to use an invisible social construct to allocate real resources efficiently, effectively or sustainably. Lord Stern agrees!

3. You fail to identify any alternative policy options to support your claim. The RBA has agreed that is policy options have become less effective and that he government should look elsewhere for solutions.

4. Again you fail to identify a policy change by the bank that could justify its existence when as noted above it has admitted other means are required to promote the national interest;

5. The problem is that central banking is but part of a specialised form of central planning which you agree does not work. We need to become decentralist if we are to create a society that can best become compatible with the natural environment;

[To be continued]

6.Your statement is untrue as the value of $A follows unsustainable resources. My article at ssrn.com/abstract=2417826 proposes tethering, but not backing a currency to a sustainable service of nature. In this way we automatically obtain price signal feedback on the size and allocation of the plague of people on the planet.

7. It is inconsistent for money to be both a neutral medium of exchange and also a store of value, especially one that competes with productive investments that increase prosperity. Your concerns about inflation and fiscal policy become irrelevant with a currency tethered to a stable sustainable service of nature.

8. Your comment makes no sense.

9. I have more faith in controlling inflation by allowing renewable natural resources defining the value of money;

10. Your views are based on the existing system of fractional banking that would be replaced as described in my academic article.

11. Existing arrangements allow an untaxed black economy that if taxed would more than balance the budget.

12. Your response makes no sense as it is the banks that currently create over 95% of official money not the government as you state. But Quantitative Easing proves that the volume of money created is not related to the needs for a medium of exchange of real goods and services but to avoid the system failing.

13. The degree to which the Black economy can exist is reduced by eliminating the convenience of using notes and coins that you response does not consider.

14. Your response is wrong. Evidence was provided to the Senate Committee hearing on November 26 last year that Bitcoins are inherently traceable to ensure that they are not duplicated as stated in my article.

15. You make two errors in your response. One is that governments need to borrow that I am not proposing and the second is that money should be saved as a store of value that I am not proposing. I say in my article it is inconsistent for money to try and undertake both these textbook traditional functions.

[To be completed later]

Aldan

16. Your claim that a tethered regional money regime that could exist independently of global manipulators, speculators and bank failures could be subjected to “an enormous internal financial crisis” is not supported by any analysis to consider. You accuse me of being concerned by “imaginary problems” but even the Basle Committee admits it cannot guarantee stability.

I will excuse you describing my proposals as “pathetic” as your views were formulated in ignorance of your wrong headed thinking identified above.

Shann, your objection to my statement "The government does create money and loan it to the banks" demonstrates that you don't understand it's both ways round.

As for your responses to my points:
1. You did not raise that point in your article. And it's a very dubious claim anyway. The USA benefits from the current system, and replacing it with your scheme would cost them far more.
2. Tying the value of money to specific goods or services distorts the economy to unduly favour those goods and services, and also requires governments to waste resources defending the currency's value.
3&4. The obvious alternative is to instruct them to give greater priority to maintaining full employment and not be so paranoid about inflation.
5. That's a strawman. Central planning does not work when used as a substitute for markets, but that says nothing about its effectiveness or otherwise in a broader context.
6. Any tethering is a bad idea – see 2. There's no good reason why we can't promote sustainable resources without wrecking the economy.
7. Far from being inconsistent, money's effectiveness as a medium of exchange requires it to be at least a reasonable store of value. No economy has ever thrived under hyperinflation.
8. Assets with a high long term value are far more sensitive to interest rates than those with no long term value, because higher interest rates strengthen the inherent short term bias.
9. And what do you think would happen when the value of those natural resources crashes relative to the value of goods and services? Or worse still, when they rise too much?
10. Are you even aware that the reserves are not what limits lending in the fractional reserve banking system?

(TBC)

(continued)

11. Your system would greatly increase the incentive to participate in the black economy.
12. Over 95%?!?!? That contradicts what I've seen elsewhere. What is the source of your figure?
13. People like the convenience which you wish to eliminate. Foreign notes and coins would take over.
14. Although Bitcoin is technically traceable, actually doing so is very difficult.
15. You don't think money should be a store of value? So you want hyperinflation?!?!? In that case there's probably no point arguing with you, as your plans would achieve that objective. But for those who don't want hyperinflation, there is a need, at least in some parts of the economic cycle, to curtail spending. Government borrowing is a way of doing this, as when banks lend money to the government they're unable to lend the same money to anyone else.
16. Tethering money introduces risks, as it is then unable to respond to market conditions. Tethered money is something we're far better off without.