I chose M0 because you are talking about creating hard money, which is what M0 measures. When you create 7.5 Trillion in hard money, you increase M0 by 200%.

I chose M0 because you are talking about creating hard money, which is what M0 measures. When you create 7.5 Trillion in hard money, you increase M0 by 200%. My very rough estimate is that this will create 200% inflation, because M0 is the base through which all other kinds of currency derive their value (hence the name "monetary base"). Reserve banking doesn't cause inflation in itself as long as the reserve ratio is fixed, because a given percentage increase in M0 will result in a similar percentage increase in bank reserves (M1). So it is really down to M0, which is also the quantity that the reserve bank manipulates through its open market operations in order to execute monetary policy. >I'll also point out that M2, not M0, is traditionally what is used to forecast inflation. That is not relevant. Forecasting inflation under the current policy regime is a completely different matter from forecasting the inflation that your proposal would cause.