It seems like a new banking system backed by something tangible again like how it was in the 1800's and prior would be a good move but would those of us in debt still be in debt to the banks? If not, how would our debts magically be absolved?
Example, say you owe money on your car and you have a ton of outstanding debt to a bank or credit lender. How exactly does implementing a new system of banking nullify this? Can't the bank still say "Since the USD is defunct, now you owe us the "New US Treasury Certificate" equivalent of that amount"?
I just can't quite put 2 and 2 together how the new currency would be debt free without older debts being absolved first.
Debt jubilee.
Don't confuse secured debt with unsecured.
A secured loan, such as a car loan, is backed by physical property. If you don't satisfy the debt equivalent in the new currency, the owner of the car can still come and repossess it.
Unsecured debt is simply forgiven, wiped away, canceled. (This is Biblical and supposed to occur every 7 years [release] or 50 years [jubilee].)
E.g.: “At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD's release." Deuteronomy 15
The entity that loaned the unsecured money knew IN ADVANCE they were taking a calculated risk and could lose some or all of their capital. It's called RISK. There is no capitalism without risk. It's that simple. They risk money in order to make more than they lose. Sometimes a LOT more. Very often, lenders win at this debt game...sometimes they don't. Oh well. Then "Neither a borrower nor a lender be," and you'll break even for life.