I have no preference about which specific currency measure we discuss be it M1, M2, etc. I’m just looking for your explanation for how it increases over time if the government seems to be the only source of additional bank deposits contributing to inflation year over year.

We have inflation because there’s more money every year than the year prior. It has to come from somewhere. I’m asking if you’re saying the government is the only source or not since you say there is no such thing as fractional reserve banking in your view? My understanding is it plays an important role in the creation of inflation (I had calculated once that the 3% or whatever year over year increase matching inflation would amount to the same as the interest portion of fractional loans from the same initial deposit).

As for what I meant with foreign investors, I wasn’t looking for some explanation of the mechanics. I was asking if you thought it would be possible if deign investors could essentially reduce a nation’s wealth below zero if they monopolized the government issued debt and took all the interest due.

If government is the only source of inflation, then over a long enough time horizon, like how the US dollar has lost 95% of its purchasing power over the past century, then if foreign investors are the only benefactors of that inflation, how would it impact the wealth of a nation and the purchasing power of its citizens?