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> for this reason they are printing money to lower the overall debt obligation of the US Except the way the US does it, the Treasury issues debt and then the F
by xhrpost 5y ago
> for this reason they are printing money to lower the overall debt obligation of the US
Except the way the US does it, the Treasury issues debt and then the Fed prints to buy the debt. So when we print $1T, we also take on $1T in debt. I know you mean lowering through inflation but as long as it's done this way I don't see how it matters. If the dollar looses 50%, we then need to issue $2T in debt and print $2T the next time.
- mattnewton 5y agoThe original trillion in debt can be paid back with 50% "cheaper" dollars though, right? That's the "trick" as I understand it.
- xhrpost 5y agoYea I guess that's true, I feel like it only matters the first time you do it though. Like if year 1 you do $1T of debt, your debt burden after 1 year is $1T. In year 2, you inflate 50%, but need to borrow $2T. Your debt is now, in year 1 dollars, effectively (1 + 2) * .50 = $1.5T. Year 3 you do it again and take $3T in debt. Now effective debt load (in year 1 dollars) is (1.5 + 3) * .50 = $2.25T. So effective debt continues to increase despite the inflation.
- mattnewton 5y agoBut each time you take more debt on, you presumably get some value from it, and if that value is greater than the interest on the debt in real terms you come out ahead. It's not money for free, it's money for cheap.