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I think you're missing the point A nation doesn't issue bonds to cover the cost of its spending, but to remove money from circulation. It's simply a way of say

I think you're missing the point A nation doesn't issue bonds to cover the cost of its spending, but to remove money from circulation. It's simply a way of saying "hey, there's too much money around. If you let us remove some of it now, we'll give you back more in the future" There's literally no situation where a sovereign nation would not be able to pay out the bonds it has issued. It's simply a matter of making the money printer go "brrrrr" and presto - the debt has been resolved In the most broad terms, the only difference between realising bonds and simply printing the money is the lag time As you say yourself - there is no magic In the case of Zimbabwe, and as stated very well by imtringued in the other post to this thread, Zimbabwe could have invested in production, education, and infrastructure to grow the economy, instead of trying to sell bonds, which is essentially saying "Hey, you know this currency that is rapidly loosing value - we're going to print so much more of it in the future! Doesn't this seem like a great investment?"

username90 6y ago
> In the most broad terms, the only difference between realising bonds and simply printing the money is the lag time. Another significant difference: Printing money transfers wealth from the rich to the poor, borrowing transfers wealth from the poor to the rich. So countries which cares for their poor and low corruption among politicians see low government debt rates, while countries like USA where politicians are very close to rich people just continues borrowing forever.
- emteycz 6y ago
  99% rich people store their wealth in assets - which are not affected by inflation at all (in fact, the value appreciation often beats it - even during a pandemic). Only the poor people have to store their wealth in cash because they don't have enough of it to buy a diversified range of assets, and the short term risk is unbearable to them (while rich people will simply hodl a little longer). Additionally, poor people usually don't have the means to renegotiate their salaries often enough to keep up with inflation, much less to beat it.
  - username90 6y ago
    The government printing bills that they then buy stuff with for the poor transfers those things from the wealthy who owned it in the first place to the poor people who got it. As the poor gets more money demand for stuff they buy increases which raises prices and leads to inflation, meaning that said inflation is a direct result of the original wealth transfer and therefore can't possible be a reverse wealth transfer as you described. On the other hand if we do the same thing with borrowed money demand for goods for poor people will still increase, prices will still go up, just that now it all has to be paid back in taxes or other transfers in the future. So the main effect is that poor people now pay more for goods they pay for with borrowed money and rich people got both interest from the governments loan and can sell their goods to the poor for more.
    - emteycz 6y ago
      All prices (but not wages - in case of low income people) are rising with inflation. The rich don't store value as currency, so there isn't any transfer of value because they don't own this kind of asset, just like inflating dollar does nothing to my euro holdings. Actually, since the only thing rich people own that's denominated in currency is debt, rich people get richer thanks to inflation. Inflation is making it worse for poor people; rich people would have stopped it a long time ago if it made them lose value.
mytailorisrich 6y ago
> "A nation doesn't issue bonds to cover the cost of its spending, but to remove money from circulation" Another patently false and strange claim... I am puzzled by where you might have got all of these "theories" from.
- Scandiravian 6y ago
  Here's a working paper from the levy institute, which covers the issue http://www.levyinstitute.org/publications/can-taxes-and-bonds-finance-government-spending http://www.levyinstitute.org/publications/can-taxes-and-bond... Or you could simply spend some time reading the Wikipedia entry https://en.wikipedia.org/wiki/Modern_Monetary_Theory?wprov=sfla1 https://en.wikipedia.org/wiki/Modern_Monetary_Theory?wprov=s... Since you now twice called my statements "patently false", without offering any evidence to your argument or even explaining them, I'd like you to provide some sources to support your claims H
  - mytailorisrich 6y ago
    Ah, "alternative theories"... The sources to support my claims are everywhere. You are claiming that I am not providing sources that water is wet. Just look up information on your country finances and borrowing, these are usually public information. Look up treasury bond, guilt, etc. These are all extremely basic stuff... Econ 101. Even the simple existence of bonds and bond auctions demonstrates that foreign nations do use financial markets to borrow and that they do have creditors. It seems to me that it is used to provide a backing to political agendas by those who have exhausted other, failed, ideas. When the UK government (and most governments at this point) increases borrowing to record level to pay for the Covid crisis this demonstrates that borrowing is used to pay for spending. If the money borrowed goes into spending it cannot be that it is to remove money from circulation... What I called out as patently false is indeed patently false. I'd be also wary of any theory that calls itself "modern". That's a classic rhetorical trick to imply correctness and that those who do not agree are not modern...
    - Scandiravian 6y ago

username90 6y ago

> In the most broad terms, the only difference between realising bonds and simply printing the money is the lag time. Another significant difference: Printing money transfers wealth from the rich to the poor, borrowing transfers wealth from the poor to the rich. So countries which cares for their poor and low corruption among politicians see low government debt rates, while countries like USA where politicians are very close to rich people just continues borrowing forever.

emteycz 6y ago
99% rich people store their wealth in assets - which are not affected by inflation at all (in fact, the value appreciation often beats it - even during a pandemic). Only the poor people have to store their wealth in cash because they don't have enough of it to buy a diversified range of assets, and the short term risk is unbearable to them (while rich people will simply hodl a little longer). Additionally, poor people usually don't have the means to renegotiate their salaries often enough to keep up with inflation, much less to beat it.
- username90 6y ago
  The government printing bills that they then buy stuff with for the poor transfers those things from the wealthy who owned it in the first place to the poor people who got it. As the poor gets more money demand for stuff they buy increases which raises prices and leads to inflation, meaning that said inflation is a direct result of the original wealth transfer and therefore can't possible be a reverse wealth transfer as you described. On the other hand if we do the same thing with borrowed money demand for goods for poor people will still increase, prices will still go up, just that now it all has to be paid back in taxes or other transfers in the future. So the main effect is that poor people now pay more for goods they pay for with borrowed money and rich people got both interest from the governments loan and can sell their goods to the poor for more.
  - emteycz 6y ago
    All prices (but not wages - in case of low income people) are rising with inflation. The rich don't store value as currency, so there isn't any transfer of value because they don't own this kind of asset, just like inflating dollar does nothing to my euro holdings. Actually, since the only thing rich people own that's denominated in currency is debt, rich people get richer thanks to inflation. Inflation is making it worse for poor people; rich people would have stopped it a long time ago if it made them lose value.

mytailorisrich 6y ago

> "A nation doesn't issue bonds to cover the cost of its spending, but to remove money from circulation" Another patently false and strange claim... I am puzzled by where you might have got all of these "theories" from.

Scandiravian 6y ago
Here's a working paper from the levy institute, which covers the issue http://www.levyinstitute.org/publications/can-taxes-and-bonds-finance-government-spending http://www.levyinstitute.org/publications/can-taxes-and-bond... Or you could simply spend some time reading the Wikipedia entry https://en.wikipedia.org/wiki/Modern_Monetary_Theory?wprov=sfla1 https://en.wikipedia.org/wiki/Modern_Monetary_Theory?wprov=s... Since you now twice called my statements "patently false", without offering any evidence to your argument or even explaining them, I'd like you to provide some sources to support your claims H
- mytailorisrich 6y ago
  Ah, "alternative theories"... The sources to support my claims are everywhere. You are claiming that I am not providing sources that water is wet. Just look up information on your country finances and borrowing, these are usually public information. Look up treasury bond, guilt, etc. These are all extremely basic stuff... Econ 101. Even the simple existence of bonds and bond auctions demonstrates that foreign nations do use financial markets to borrow and that they do have creditors. It seems to me that it is used to provide a backing to political agendas by those who have exhausted other, failed, ideas. When the UK government (and most governments at this point) increases borrowing to record level to pay for the Covid crisis this demonstrates that borrowing is used to pay for spending. If the money borrowed goes into spending it cannot be that it is to remove money from circulation... What I called out as patently false is indeed patently false. I'd be also wary of any theory that calls itself "modern". That's a classic rhetorical trick to imply correctness and that those who do not agree are not modern...
  - Scandiravian 6y ago