demand deposit account. (That is especially clear if one's mortgage is in the same currency as his cash and demand deposit.) How can the Federal reserve system be made to look more like free banking in this regard? In other words if people decide to hold more cash and or pay down loans shouldn't the Fed just print more currency and allow the banks keep it on their books like demand deposits? Countries participating in free trade in a globalized system, especially in unregulated global financial and currency markets, cannot operate on Chartalist principles because of the foreign-exchange dilemma. For a country participating in globalized trade, any government printing its own currency to finance domestic needs beyond the size of its foreign-exchange reserves will soon find its currency under attack in the foreign-exchange markets, regardless of whether the currency is pegged to a fixed exchanged rate or is free-floating. The only country exempt from this rule, up to a point, is the uS because of dollar hegemony" What is an "attack" in a free floating system? For an exporter, such an "attack" would merely make it's products cheaper (China has been "attacking" its own currency for years...) Let's say your Nowhereistan. You have a freely floating currency, and your main export product is the wool of mountain goats. George Soros twirls his mustache (Does he have one? He should.) and says, "I will bring them to their knees!" He proceeds to sell Nowhereistani rube-dollars short, halving their value. Import prices