Yes, but not without consequences. Creating money without corresponding increases in real output can lead to inflation.
Well, think about how and when money is created. In the private sector, people and businesses get loans when they want to increase consumption or invest in their business. Both should increase production. In the public sector, money (bonds) is created for deficit spending, which should also increase production. The only money that probably won't be used in C or I is the interest on the debt, but that really just goes into more bonds and sits there.
And again, deficit spending results in more bonds, not more dollars. The CB adjusts the amount of MB as they see fit, but that's a separate operation.
The government doesn't shoot for some level of MB ahead of time, if that's what you were thinking.
Zimbabwe and Venezuela both had sovereign currencies. Didn't go so great.
The reason for both of those examples of hyperinflation (and most other instances of hyperinflation) was a
big drop in production that led to shortages and inflation. Zimbabwe broke up the big farms and ag production cratered. And in Venezuela, the price of oil took a steep dive, so they could no longer pay for necessary imports with their oil exports.
Money printing is a poor response to real economic issues, but it's probably politically pragmatic at the time.
But a bond is still a promise to pay. The government does rely on markets to absorb its debt - unless the central bank monetizes it, and again, that means the risk of inflation.
Bonds are a promise to pay, but a government can meet those obligations without expending any real resources, unlike a household. As for relying on the markets to absorb treasuries, there will always be a market for treasuries as long as people are accepting dollars in payment. Exchanging bonds for dollars is not the thing anyone should be worrying about. Losing our foreign trade partners, their cheap goods, and the demand they bring is a far bigger worry right now.
Interest on the debt is already crowding out other spending. Furthermore investors who buy treasuries are using money that could have otherwise been invested productively in the private sector, instead of being wasted in the public sector.
The whole "crowding out" argument is overblown. Explain how the private sector earning interest on treasuries is going to crowd out anything. And investors who buy treasuries are only buying treasuries because there is nothing else out there that they
want to invest in. The other options are always there, but at some point people will opt for the safe, low returns of treasuries instead of just holding cash.
At least until investors lose confidence.
If things ever get to the point where nobody is accepting the USD in payment, we will have far greater problems than our pile of outstanding bonds. And it won't be the fault of the bond market, it will be the fault of the economy at large, as in nobody buying what we are producing.
Semantics. If you owe someone a payment in the future, you’re in debt, end of story. Interest payments aren’t just "pushing dollars", they are a form of redistribution to the wealthy - a group which you people supposedly hate.
It's not semantics at all. The difference between household debt and sovereign debt changes the whole cost/benefit analysis of deficit spending. The government is not sacrificing future spending in order to deficit spend today.
I'm not crazy about the fact that the wealthy benefit from interest payments, but the wealthy already benefit from everything else disproportionately, and interest on treasuries looks like small potatoes next to their share of the income pie.
