Debt and cash

I never bothered to much with trying to get banking terms straight, I wanted the economic fundamentals. So, better late than never, here is my view of money and debt.  

Money is created by seigniorage via the fiat bank owners. Debt cannot create money because debt had positive interest rates only, and the assumption in that theory is the bank does not have net losses. Inflation does not help, the theory that debt creates money, all by itself, is wrong.

Ultimately, the fiat banker provides a service, cash utility. The banker gets paid, like .5% or something, in a seigniorage account. Fiat banker trade  losses will debit the seigniorage account, trading gains will credit the account.

For example, if Janet decided to sell off the portfolio of long dated bonds, and incurred a trading loss over the holding period, then that is a debit to the seigniorage account. However since the loss was on a trade with Treasury, Treasury would credit its account called bond gains. Thus, it resolves into Treasury, the owner of the Fed, taking its share of seigniorage. The economy, has a whole, makes a slight adjustment to recognize the gains by Treasury and the small amount of inflation. It the price we pay for the utility of cash.

But here is the catch. Overdrawing the seigniorage account causes inflation and cash loses utility. Then users begin looking for other suppliers of cash services, like stocks. At that point, the capital owners are replaced, there is regime change.