As I understand it, you system is the same if the cap is $1M per capita, or $10,000 per capita. The only difference is that the average price of goods would need to adjust up or down… Then each of those would be interchangeable.

So we need to ensure within this approach that the price of goods does not inflate. If they do, then eventually the fed will not have enough money within the cap to maintain the 1.5%.

The challenge is, if I am understanding, a local governance might choose to tax very little, and spend large amounts. The citizens are happy to get so many services and pay so little! But over time this continuous injection of cash into the system will lead to hyper inflation of that system.

So it seems in order for this system to be stable some force must keep governments from leveraging all of this easy credit they have available. right?