Re: Advantages/disadvantages of a monetary system that is entirely endo vs exo create
Not sure if this is relevant, but The Greenback puts loaning authority, as well as any central bank process in the hands of the government. Historians believe the reason why Abe Lincoln was assassinated had to do with him promoting The Greenback. In fact, there are letters from bankers that have be confiscated, and they did not want The Greenback because it was something they could not control. So the theory was he was killed, and the foundations of our current banking system was established.
In the Greenback, the government is the loan issuer. If I wanted a loan on my farm, I would go to the government. They would provide me cash with interest and a payment plan. Interest on loans, are taxes so to speak. If people had loans out, the amount they would be paying on taxes are reduced from overall taxes. People could get a surplus if they had more loans than the tax rate. In the end, the government wants to loan out money to get more interest, to use that money in theory. Banks in this system, just store money.
I'm bringing this up, because The Greenback is exogenous money to the T. I think the overall system is constructive, however there is a lot of financial power onto one entity, and that's the government. It would be like having a central bank, a treasury, and a large component of the banking system all rolled up into one entity. The first thing that comes to mind, is corruption. I mean, there is so much corruption these days I'm not sure if it could get worse. If you put these duties on the shoulders of congress, in theory it would be less corrupt there. I think government has even more power because they are such a huge influence on everyone's finances. Maybe someone could play the system for exploitation for the gain of a few.
I guess one advantage and/or disadvantage to vertical money, is the source of the currency lies within the central entity. In the greenback system, I start to ask, why have interest? You want the people to work and be constructive to society, so really the concept of paying back the government is paramount. But all of that money can just be created. The government would have the power to just create more money for loans, and pretend that the interest rates on those loans matter.
Maybe it is me just being used to what I am studying, but I like the concept of a separate central bank. The banking system, central bank, and treasury all work together, with one of them, the central bank, prepares for systemic risk. Whereas with vertical money only everything resides onto that single authority. My intuition is telling me, but I haven't thought it through (it's late), that it would be harder to prevent or recover from systemic risk under vertical money compared to horizontal.