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Treasury bonds are bought with USD. Where does USD come? The government prints it. Borrowing doesn’t fund the government, the printing press does. At the botto
by alexmingoia 6y ago
Treasury bonds are bought with USD. Where does USD come? The government prints it. Borrowing doesn’t fund the government, the printing press does.
At the bottom of the tower of USD is printing money. ~80% of treasuries are held domestically, and the foreign buyers purchase it with USD that came from the treasury.
- mr_toad 6y agoThey could opt to pay for it out of tax revenues. Or they can issue new bonds to repay old bonds. They can print money, but the optics are bad. The loss of confidence in the value of the dollar is as much a cause of hyperinflation as the actual money supply. Loss of confidence in the value of the dollar can rapidly increase the velocity of money, which means that less money supply is needed. This causes more inflation, which further weakens confidence, increasing the velocity further, causing prices to spiral out of control.
- alexmingoia 6y agoIt’s all printed money. Taxes are paid in USD. USD comes from... the government creating it from nothing. Tax revenue is old printed money. Bonds are future printed money. All government revenue is money they created.
- mr_toad 6y agoWhat I mean is that they don’t need to necessarily print more money, or at least print 100% of the debt.