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Basically .... the price of X is the ratio at which the marginal persons are willing to exchange dollars for X.
There is a basic instinct among humans to use collectibles of tokens of "I did this for you, you owe me a favor in return" --- https://nakamotoinstitute.org/shelling-out/. As society evolves, a particular collectible can be a Schelling point for the token a society uses to track exchange of value and this token becomes valued in its own right -- this is "money." If the society has a government, this government might find it convenient to demand taxes in this token, rather than say, bushels of grain. The token becomes embedded in contracts, which means demand for it is stabilized because people will always need this token in order to fulfill a contract and not lose their house or car. A very strong government might force people to use a government created token as the dominant collectible and medium of exchange -- hence fiat currency like the U.S. dollar.
This is only true if the fractional reserve banking is backed by the Federal Reserve and the FDIC. Otherwise every time the bank issued a new loan, everyone else's deposits would become more risky and their expected value would be below par with a straight U.S. dollar.
Back after the 2008 crisis I did a ton of reading on macro, reading original sources from Mises to Keynes, reading original ground-breaking academic papers, reading defenses and critiques...and I basically came to this same conclusion.
The current way of generating inflation -- by subsidizing low interest rates which then stimulates otherwise unprofitable investments and asset bubbles, which then create wealth effect spending -- is both incredibly regressive and continues a cycle of instability.
Renominating bank accounts does have a couple tricky aspects:
The banking system is still very fragmented and archaic, there would need to be major consolidation, legal, and technological upgrades for the government to simply renominate bank accounts at the snap of their fingers. A lot of people might not like this because it would turn into everyone basically holding their bank accounts directly with the government. (Which is de facto what we have now, but a lot of people don't realize this and would object to making it overt and formal).
It is, in a sense, the government overtly stepping in and cancelling a portion of everyone's debts. At least that is what it seems like, if the renomination is done to perfectly balance out deflationary tendencies, it will not in practice be this, but there will be a lot of arguing over it.
It makes it seem like the government is just giving away money. Whereas using interest rate manipulation to stimulate lending doesn't seem like a giveaway.
But the real problem is a deep political problem -- the current way of stimulating the economy allows for backdoor gifts to large numbers of politically powerful people and classes. It was a stunning for me to realize that 1) the current system of stimulating the economy was a massive giveaway to the rich, dwarfing what rich lose through progressive taxation and 2) no liberals/Democrats really seemed to care about this issue, and most powerful liberal/Democrats benefited from it. My conclusion from that, was not "full communism now!", but rather that it is probably just a law of human society that the rich are going to benefit more from the government, even in societies that brag about their history of government benefiting the poor and middle class.
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