Not all inflationary pressure is equal (i.e. it's not true that printing X dollars leads to Y% inflation—the kind of dollars X represents matters a great deal). In part, my scheme wouldn't cause hyperinflation for much the same reasons that fractional-reserve lending doesn't cause hyperinflation, even though it also increases the money supply (drastically, too).
It matters a great deal how the money is put to use, and why, and what limits are set on the increase in the money supply. For example, it's obvious that fractional-reserve lending would not work if the fraction was 0/100 (i.e. no reserve). Similarly, large-scale money printing doesn't work when it's arbitrary and up to political whim.
Also, a nitpick: M2, not M0, is traditionally what is used to forecast inflation.
I chose M0 because you are talking about creating hard money, which is what M0 measures. When you create 7.5 Trillion in hard money, you increase M0 by 200%. My very rough estimate is that this will create 200% inflation, because M0 is the base through which all other kinds of currency derive their value (hence the name "monetary base").
Reserve banking doesn't cause inflation in itself as long as the reserve ratio is fixed, because a given percentage increase in M0 will result in a similar percentage increase in bank reserves (M1). So it is really down to M0, which is also the quantity that the reserve bank manipulates through its open market operations in order to execute monetary policy.
>I'll also point out that M2, not M0, is traditionally what is used to forecast inflation.
That is not relevant. Forecasting inflation under the current policy regime is a completely different matter from forecasting the inflation that your proposal would cause.
My proposal would not be run under the current policy regime, and you're absolutely right: trying to forecast inflation from (part of) my proposal using M0 from the current policy regime isn't relevant. I'm not even clear why we're discussing it at all.
The theoretical and empirical relationship between changes in the money base (M0) and inflation are well established, and based on very simple intuition: changing the amount of hard money by a factor of 3, results in a change in the value of money by a factor of 1/3. I can't educate you on macroeconomics in this thread, please refer to any macro textbook.
It matters a great deal how the money is put to use, and why, and what limits are set on the increase in the money supply. For example, it's obvious that fractional-reserve lending would not work if the fraction was 0/100 (i.e. no reserve). Similarly, large-scale money printing doesn't work when it's arbitrary and up to political whim.
Also, a nitpick: M2, not M0, is traditionally what is used to forecast inflation.