Here are active links to the articles Mansoor Khan refers to in his comment to Debt, Total Debt and by Sector. I encourage the reader to check them out. First:
http://seekingalpha.com/article/209386-modern-monetary-system-there-is-another-way
In Modern Monetary Theory, (as far as I understand it.) the government creates money by printing it, politically easy, once established, preventing inflation, and destroys it through taxation, countering inflation, politically hard. A government of reasonable virtue and principle would be required. A certain amount of inflation is more likely. Indeed, since debtors tend to be numerous, and creditors relatively few, a certain amount of inflation, which favors debtors, might counter natural tendencies toward the concentration of wealth. Compare this to what we see: Creditors have seized control of the government, and seeking to retain what are essentially ill gotten gains, are directing the government toward our common ruin.
(For a nice exposition of the problems with the current system, see:
Money as Debt:
http://www.youtube.com/watch?v=Dc3sKwwAaCU&feature=related
Or:
http://video.google.com/videoplay?docid=-2550156453790090544
And:
Money as Debt II:
http://www.youtube.com/watch?v=rCu3fpg83TY )
Next from Mansoor Khan:
http://aquinums-razor.blogspot.com/2011/08/what-is-relationship-of-money-to.html
And:
http://aquinums-razor.blogspot.com/2010/07/why-is-deflation-and-depression.html
http://seekingalpha.com/article/210346-should-newly-created-money-be-a-private-or-a-public-asset
Good. Helicopter money to every citizen. Give citizenship a tangible benefit, rather than the burden implied by the national debt. Negative taxation, which is precisely what the government should do when demand is depressed. And/Or it could guarantee employment, which would work as an automatic stabilizer.
http://seekingalpha.com/article/192375-cause-of-today-s-economic-crises-too-much-thrift
http://seekingalpha.com/article/160269-a-radical-solution-for-america-s-insolvent-financial-system
An orderly bankruptcy of the financial system, with the government as receiver.
http://seekingalpha.com/article/-great-banking-confusion-is-there-a-better-way
Mansoor's proposal for 100% non-lendable equity accounts seems doable. They would carry essentially negative nominal interest. The magnitude of this interest would be minimized by interbank competition for deposits.
