Originally Answered: Why Do Liberals Seem To Like The Fed's Ever-Expanding Money Supply?
Whew... Where do I begin??
This is not how a pyramid scheme works. Perhaps you should elaborate on the comparison.
The Fed doesn't "print money" in order to increase the (M2) money supply. Perhaps you meant the U.S. Treasury, since they're the ones who actually print money. (I'll get back to that.) The Fed actually buys up its outstanding debt (T-bills, notes, bonds) in order to increase the (M2) money supply, and it's a good thing for the Fed to do this when the money supply is so low and when there's no sign of inflation - like right now! Of course, the Fed also sets the federal funds rate in order to influence money supply.
Just what would you like to see the U.S. Treasury back our currency by? Gold?? That would be unrealistic and would be a bad idea. (Perhaps you should read Ben Bernanke's book on The Great Depression, called "Essays on The Great Depression" by Ben S. Bernanke.) To put it in a nutshell, an ever-expanding economy's currency should not be tied to a relatively non-elastic commodity such as gold.
People who are well-informed about the history of a regulatory bank such as the Fed don't have to be liberal. I prefer the Fed to the alternative: wild swings in the supply of money and in inflation/deflation.
And "no"... Whether or not I'm a liberal, I wouldn't "agree to just cancel the Fed and return to 'proper American money,' " whatever the heck that is! I've looked at the horrible history of the swings I've mentioned from 1836 to 1913 and I don't want us to return to the past and have to re-learn its lessons.