The "hell money" phenomenon that has ravaged the global economy — and which the Powers-that-Be insist must be maintained at all cost — is based solidly (if something built on shifting sand can be called "solid") on a number of fallacies. That is, one, money represents the present value only of existing marketable goods and services in an economy. Two, only the State has the right to create money. Three, the only way to finance new capital investment — or anything else — is to cut consumption, accumulate money, and then spend it, whether on new investment or consumption.
Consequently, if money represents only the present value of existing marketable goods and services in the economy, and only the State has the right to issue claims against these marketable goods and services, the quantity of money is, in a sense, irrelevant from a macroeconomic standpoint. All the State does by printing up more hell money is to divide the existing pie into smaller and smaller pieces. Some microeconomic "adjustments" necessarily take place, but the Big Picture is okay, and everything's fine. A little redistribution through direct taxation or the hidden tax of inflation, and things will stay on an even keel.
The whole theory of Keynesian "forced savings" relies on manipulating the currency through inflation. In the system dictated by the "Currency Principle," that is, that money consists exclusively of coin, banknotes, demand deposits and some time deposits, all money is presumably backed only by the present value of existing marketable goods and services. This is because the State, that issues the currency, is believed to have effective ownership of all the wealth of the economy through its power to tax.
Thus, within the Currency Principle paradigm, it is impossible for a State to issue too much money backed by its own promise to pay. If all money is backed by the general wealth of the economy on which the State has a claim, all that is being done when the State inflates the currency is (as we noted) to divide existing wealth into smaller and smaller pieces. Wealth is redistributed by this means, but the amount of money cannot possibly exceed the State's ability to make good on its promises, even if — in theory — the tax rate is 100% on all wealth, and the economy becomes socialist in name as well as in fact.
Unfortunately there are many things wrong with the basic theory of the Currency School. Most obvious is the fact that taxation is not an exercise of the State's ultimate property in the wealth of the economy, as Thomas Hobbes, the totalitarian philosopher, asserted. Rather, as John Locke reminded us, taxation is a grant from the citizens to cover the costs of government, and is illegitimate without their consent.
Then there's the problem of limiting our understanding of money to State-issued or sanctioned coin, banknotes, demand deposits, and limited time deposits. This leaves out private sector issued bills of exchange that constitute the bulk of the money supply in non-socialist or partially socialist economies.
In the United States, for example, Congressman George Tucker estimated that in the 1830s private sector bills of exchange, not coin or banknotes, amounted to between 95-99% of the money supply. In 1916, Dr. Harold Moulton reported that the money supply appeared to be predominantly private sector bills of exchange, between 75-80%. Even as late as 2008, when the State has gained far more control over the economy than the Founding Fathers ever imagined possible, a rough calculation suggests that as much as 60% of the transactions in the economy were carried out by means of privately issued bills of exchange.
One problem with the Currency Principle that is not obvious is that the backing of the money is not limited to the present value of existing marketable goods and services. The only State-issued money that meets this criterion is the United States Note (the historical vestige of the old "greenback"), by law backed by gold — but not convertible into gold!
All other State-issued money — coin, Federal Reserve Notes, and commercial bank demand deposits at the Federal Reserve — are backed by the present value of future tax collections. These rely on the "faith and credit" of the issuing government to be good.
What this means is that, if the government is strong enough to collect sufficient taxes in the future to redeem its promises, then the currency will be sound. If the government isn't strong enough to collect taxes, the citizens refuse to grant the taxes, or there is insufficient production in the economy to maintain the tax base, then the currency will fall in value and, in extreme cases, become worthless.
Thus we can understand why Keynes, trapped within the Currency Principle, insisted that the State must have absolute power, and be able to "re-edit the dictionary" (redefine substantial reality) at need or will — effectively become a god — in order to try and force a system based on ghosts and shadows to work in spite of reality. In the Keynesian world, the private sector exists only to serve the State, not the other way around.