If nothing else, we're seeing an interesting exercise in States Rights: the Feds aren't doing much, but all the states seem to be taking their own action.
Holy cow, is that part of the system actually working?
Re: financial stuff - it would be cool if we had something like the Year of Jubilee - just erase all debt. I bet you could argue that the impact of simply simultaneously declaring all loans fulfilled is better than creating money to pay them all off.
There's kind of one big problem there. A lot of that loan money was loaned out against bank deposits. With a 10% fractional reserve system, annulling the loans would roughly wipe out 90% of all account holdings. Banks would just no longer have the assets on their books to pay out their liabilities. The liabilities is what they owe others: your account holdings represent what the bank owes you, the outstanding loans represent what others owe the bank. You've just wiped out the positive balances from the bank's books while leaving their
own debts intact. All banks would immediately file for bankruptcy, to avoid being lynched in a run on the bank, and the few meager pennies on the dollar would be paid out in the liquidation hearings to the bank's creditors, who are the account holders.
I'm sure there are many more problems with the idea but I'm not an economist, but I can tell you, the value of bank deposits is guaranteed by the value of the outstanding loans.
So, you can see, you can't just "annul all loans", that's the same as "abolish all banks and delete everyone's account, positive or negative". The best you can do is that the Fed
buys debt then forgives the debt. However, this would cause it's own issues:
With the fractional reserve system, if 1 trillion dollars was originally banked, then the bank had 1 trillion on hand, and could lend out 900 billion of that, which would then be deposited, and 90% of that remainder lent out, etc etc. The end result is that there's 10 trillion in deposits, but a lot of that is tied up in debts.
You come along and
buy all the bank debts and forgive them. That's $9 trillion worth of debt. but hold up, who gets that money? It's the creditors, who are the banks. The banks now have $10 trillion in deposits, and $10 trillion in cash and no outstanding debt from anyone.
So, since they have $10 trillion in deposit, and an equal amount of cash, and they "haven't lent any out", they can now lend out $9 trillion worth, then that gets deposited, then they lend out $8.1 trillion, and so forth. And the end result is that there are $100 trillion in bank deposits and $90 trillion in debts.
Now, at this stage the Feds have a real problem. Inflation is through the roof, and the banks are actively trying to lend out $90 trillion dollars, so they're offering really low interest rates. All that extra credit in the system means that the Fed's main tool for controlling inflation - Reserve bank interest rates - isn't having any effect, since the banks just ignore it since they've got so much spare cash they're trying to lend out, and the more they lend, the more they have.
Final result: Economy destroyed, massive inflation, impossible to save, and anyone who had their savings in a bank account is homeless and eating dirt because a loaf of bread now costs $50.
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