Question

Would it be possible to privatize the money supply in the United States completely? In doing so, what would be the primary obstacle to overcome in implementing such a policy?

Answer 1

No, it is not possible to privatize the money supply in the United States completely. Controlling money supply in the economy is an important determinant of inflation rate target in the economy. If this task is given in the hands of private players then vested interests will take a first step rather than welfare of the economy and thus macro economic stability of the economy will be compromised due to privatization of money supply.

Even though this policy has drawbacks, if this policy is implemented then the primary obstacle to overcome in implementing such a policy is the consent of the government whose interest of maintaning fiscal targets sometimes clashes with inflation rate targets of the Central Bank. Thus, acquiring the consent of the government to implement such a policy is the major obstacle to be overcomed in implementation of such a policy.