traditional banks with investment trusts that issue equity, and that in addition sell their own private non-monetary interest-bearing securities to fund lending. But Simons was always acutely aware that such securities might over time develop into near monies, thereby defeating the purpose of the Chicago Plan by turning the investment trusts into new creators of money. There are two alternatives that avoid this outcome. Simons himself, in Simons (1946), advocated a “financial good society” where all private property eventually takes the form of either government currency, government bonds, corporate stock, or real assets. The investment trusts that take over the credit function would therefore be both funded by equity and invest in corporate equity, as corporate debt disappears completely. The other alternative is for banks to issue their debt instruments to the government rather than to the private sector. This option is considered in the government versions of the plan formulated by Means (1933) and Currie (1934), and also in the academic proposal by Angell (1935). Beyond preventing the emergence of new near-monies, this alternative has three major additional advantages. First, it makes it possible to effect an immediate and full transition to the Chicago Plan even if the deposits that need to be backed by reserves are very large relative to outstanding amounts of government debt that can be used to back them. This was the main concern of Angell (1935). The reason is that when government funding is available, banks can immediately borrow any amount of required reserves from the government. Second, switching to full government funding of credit can maximize the fiscal benefits of the Chicago Plan. This gives the government budgetary space to reduce tax distortions, which stimulates the economy. Third, when investment trusts need to switch their funding from cheap deposits to more expensive privately held debt liabilities, their cost of funding, and therefore the interest rate on loans, increases relative to the rate on risk-free government debt. This will tend to reduce any economic activity that continues to depend on bank lending. When the switch is to treasury-held debt liabilities, the government is free to set a lower funding interest rate that keeps interest rates on bank loans to private agents aligned with government borrowing costs. It is for all of these reasons that we use this version of the Chicago Plan for the core of our theoretical model. Specifically, after the government buy-back of non-investment loans, the remaining credit function of banks is carried out by private institutions that fund conventional investment loans with a combination of equity and treasury credit provided at a policy-determined rate.