One drawback of fiat paper money lies in the incentive provided by Seigniorage, the revenue gained from its production (because the money’s nominal value exceeds the cost of production).
Another effect of Seigniorage is that every time new money is created, holders of existing money have their purchasing power or real value reduced.[Inflation]
Since producers of money, whether counterfeiters or governments, or in the case of present Australia...private Banking, collect seigniorage revenue, the temptation exists to inflate the currency and reduce its exchange value.
More importantly, the financial benefits of Seigniorage have been removed from Government [the people] hands, and that license to print money is firmly in private hands.
These benefits of Seigniorage also accrue whether the Nation is experiencing good times or bad, during the bad times the private Banks always make healthy profits.
Also of major concern is the fact that the Constitution actually allows for the Government to create money itself under Section 51, subsection (xii) ...the power to make laws... with respect to Currency, coinage and legal tender, and (xiii) Banking... and the issue of paper money.
Agents of Banking have thwarted many attempts to curtail the power of private Banking over the decades with many Parliamentary Bills being thwarted from supplying a democratic money system to the people.
Even the CommonWealth Bank of 1912 to 1923 was not granted the full powers that National Banking should bestow on a Nation.
As well as Seigniorage, the Banks get the added benefit of Interest, usually many times over, and with little concern over the rate of Interest.
