This would have obviously bad effects, causing people to great lengths to avoid holding cash. I think income or sales tax is the only way to distribute large amounts of money from the rich to the poor.
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.
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.