I can understand that in current times, inflation would almost be a good thing, but how do you guarantee that, in normal times, a gouvernment will not abuse this possibility and proceed to money emissions that results in high inflation? By "high" inflation, i'm refering to what was known in the 70's: 10% or more/year. A free fox in a free henhouse!
Goverenments cannot be trusted not to over-issue, and if governments are involved as credit 'emitters' then it must not only be managed by professionals with a stake in the outcome but also supervised by a democratically accountable monetary authority.
This architecture, which dis-intermediates private banks, but not States, is only a transitional step in any case to be used in the event of a further credit freeze.
The end-game is total dis-intermediation, which will come about 'bottom up' not top down, and is complementary both to the existing system, or that envisaged here. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
