Public Money - Private Accounting

This is the plan for the new money system:

Public Money  -  Private Accounting

There is a given amount of money in circulation today that we use as means of exchange.  When it is not being exchanged it is a store of value.  If not spent it is saved until spent.

Total US dollars in circulation is the  M1 money supply and that is is $1.8 trillion.  Gross Domestic Product (GDP) is about 15 trillion dollars annually.  Fundamentally, what is produced each year equals what is consumed  and that is called Gross Domestic Consumption (GDC).  What workers are paid to produce, they spend to consume.  They produce and consume about 15 trillion dollars worth of goods and services stuff per year.

If the total M1 money money supply used for all the yearly paying and spending of dollars to produce and consume is $1.8 trillion then each dollar gets spent about 8 times per year.  If workers were paid once per month and also spent monthly everything they were paid monthly then for all workers to spend all their paycheck monthly to buy stuff would only require a total money supply of about 1.3 trillion dollars, not $1.8 trillion.  There are things that account for the difference.  They are details in the big picture.  Forget about them for the time being.  This is a big picture look at money in a new monetary system.

The store of money needed in the new monetary system:  $1.8 trillion.  About 98% of the M1 money supply is digital money existing on a computer.  The remainder, 2% is paper currency residing in pockets, under mattresses, in cash registers and bank vaults.  About 60% of all $100 dollar bills circulate outside the USA.

Here is the straw man idea for a new monetary system

1.  Revoke the authority of the Federal Reserve to create money out of nothing.  Restore this authority to the government as it sovereign constitutional right.

2.  Pass legislation that authorizes any financial entity to create a private money system.  Any entity that operates a private money system must have ownership capital in US dollars equal the the amount of dollars in the money system that it operates and be registered by the government to operate a private money system.

3.  Convert the existing M1 money supply of $1.8 trillion to a new money supply of $1.8 trillion.  Each new digital dollar is uniquely serialized in the denomination of one dollar.  Each dollar is associated to an owning financial entity.  All citizens are entities, any combination of citizens may be a financial entity,  All businesses are financial entities.  The money supply would exist on a government computer system

4.  Any financial entity may choose to use US government dollars for any transaction or private money system dollars backed by US government dollars.  Private money systems may offer any value added benefit to the use of their private money system, the value added being the reason anyone would choose to use the private money system.

I will return to the idea of private money system operation in some future entry.  With some registration controls and an minimum of consumer protection laws, Private Money Systems would be allowed to operate as a free private enterprise business market open to all who wish to enter and compete in the private money market.

Every new digital dollar in the government monetary record would be mirrored on a