[Allerton]

I have a few questions about privatized debt and public debt. Why doesn't the federal reserve just lend money to the Federal Government at 0% interest? That way the debt can be paid back through taxes and the risk of a large spiraling deficit is largely avoided. Why should our money supply not be public instead of private?

[Nunt]

Inflation

[Allerton]

How so, exactly? Would a public money supply necessarily lead to inflation?

I've seen this idea thrown around a lot by the various "Occupy" groups and their offshoots and am very curious about it. Several politicians in Canada have endorsed this idea as well.

[Daktoria]

http://en.wikipedia.org/wiki/IS/LM_model

Basically, when interest rates go down, credit is cheaper, so the money supply goes up.

Therefore, prices go up.

http://en.wikipedia.org/wiki/Demand-pull_inflation