mithril - re the money supply: Yes, the total money supply can...

mithril - re the money supply: Yes, the total money supply can be changed by money flowing through the system. But it's a system that needs that kind of flexibility. If I make something and sell it, the money supply needs to be able to grow or it gets stressed. That's akin to a company issuing shares. But I'm not allowed to set up my own printing press and print the national currency, which is more akin to what short-selling does.

re "If you buy a put the bank will short sell in the market". But I'm arguing that short-selling in the primary market should not be permitted, because it distorts the primary market. The bank would have to take the risk or find some other way of protecting themselves. I understand that actions in one market can get reflected in another, but the primary market is the one that defines the underlying assets being traded in all markets. If that gets distorted or corrupted, then all markets may be threatened.