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Compared to a car, T-Bills are much more liquid, and their value is stable over time and easily determinable. This is why they're the canonical example of a cas

Compared to a car, T-Bills are much more liquid, and their value is stable over time and easily determinable. This is why they're the canonical example of a cash equivalent [0]. From financial institutions' perspective, they're more "cash-like" than cash, in part because they're easier to work with than briefcases of $100 bills. > The author's assertion is that the government can borrow money, spend it, then print money to pay off the debt and somehow not increase the money supply. The government can borrow money, use it to repurchase government-issued cash equivalents, then print cash, the the money supply will not increase. While private institutions prefer to use T-Bills for liquidity, they can use briefcases of $100 bills - their balance sheets would look exactly the same (because from an accounting perspective, cash equivalents are, well, equivalent to cash), and the Treasury's would be only nominally different. Maybe T-Bills would start trading at a premium because it's valuable to not have to deal with physical cash, but other than that, nothing would change. [0] https://www.investopedia.com/terms/c/cashequivalents.asp https://www.investopedia.com/terms/c/cashequivalents.asp

gmiller123456 8y ago
Your point in non-nonsensical. If T-Bills are equal to cash, then the government doesn't need to sell them, they'd just use them like cash. Yes, they are very liquid, but they are not cash. Even if they are only cash-equivalent in certain situations, they'd be increasing the money supply by freeing up the cash that would otherwise be used in it's place. "The government can borrow money, use it to repurchase government-issued cash equivalents" Yes, this is what's being done today. But it does not resolve the government's debt, it just changes who they owe it to and when plus interest. So the net effect is an increase in debt. This process is only sustainable for as long as people are willing to lend the government money.

gmiller123456 8y ago

Your point in non-nonsensical. If T-Bills are equal to cash, then the government doesn't need to sell them, they'd just use them like cash. Yes, they are very liquid, but they are not cash. Even if they are only cash-equivalent in certain situations, they'd be increasing the money supply by freeing up the cash that would otherwise be used in it's place. "The government can borrow money, use it to repurchase government-issued cash equivalents" Yes, this is what's being done today. But it does not resolve the government's debt, it just changes who they owe it to and when plus interest. So the net effect is an increase in debt. This process is only sustainable for as long as people are willing to lend the government money.