You wrote: "Incidentally the credit money stored in Treasury's commercial holding accounts is not used for any purpose, it is dead money. Nor is it included in M1 (i.e., it is not part of the money supply)."
That's an important statement. I think we should elevate it.
The Revolving Fund of the NEED Act is such money until spent into the real economy (if we are to no longer consider "finance" capital as real – a position I advocate).
The NEED Act requires the banks to rather than extinguish debt-money through attrition, pay it over to the federal government to park in the Revolving Fund ostensibly to avoid money-supply contraction.
If you are correct, and I say you are, then we should let the banks lose their debt-money by simply ending fractional-reserve lending while we don't bother with the accounting exercise of creating "dead money" in the Revolving Fund but rather fund projects directly and forget about "revolving."
Any over-supply/inflation should be handled electronically within the single depository. All boats rise with the tied – no favoritism – no special privileges and advantages. The measurement should be via the all-transactions/all-items Price Index ascertained by the computer system I've outlined in this discussion thread rather than relying upon the slow and antiquated method that is the Monetary Authority as anticipated by the NEED Act as it stands as of the date of this comment of mine.
Naturally, I state all of this from the anti-coercive, full-socialist/communist, Christian perspective.
Monetary Reform: Series 1: here