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I don't see any inherent problem in having the sum of all deposits far exceed the actual amount of cash in existence. I do find it odd that the Fed and Congress permit the banks to exert strong control over the total money supply by adjusting how much cash they hold in reserve rather than having the Fed itself control the money supply.

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Of course there is an inherent problem with it: it's fraud. Just because it's fraud we are used to doesn't make it any less so.

Demand deposits should be covered via reserves. Loans by banks should be duration-matched to financial instruments offered to the public. Presto, no bank runs and the interest rate is driven by a market expression of societies time preferences.

Economic stimulus is done via government spending, rather than jamming money into an already bloated financial sector. I would favor a universal citizens dividend for this, to minimize corruption.

This is not an indictment of the Fed, but with respect the Federal Reserve == the banks.

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