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> The key point is that a government that issues debt in its own currency can always service that debt, and this is NOT inflationary. Hmm. Let's follow your ar

> The key point is that a government that issues debt in its own currency can always service that debt, and this is NOT inflationary. Hmm. Let's follow your argument to its conclusion. Why stop at 300% of GDP? Why stop at 300 times GDP? It seems that even a small nation with a sovereign currency can eliminate all taxation, borrow an infinite amount of money, buy an infinite amount of stuff, make all of its citizens infinitely wealthy, service its debt with printed money forever, and prices and interest rates will both be unaffected. It's amazing, then, that no nation has yet taken advantage of this exploit! I feel confident that is not right. I think it may be right that (marginally?) there is not a big difference whether a fixed amount of government spending is financed by taxation or debt, because printed dollars and t bills are so easily interchangeable. But it seems that you are trying to use this argument to prove that if these things are equivalent that they are (in any quantity!) harmless, and that's a non sequitur.

amrocha 2y ago
Of course that’s not what I’m arguing, please don’t straw man me. The constraint on public spending is the amount of real resources that can be utilized. Productive utilization of resources is not inflationary. For example, if you have 10% unemployment, a government can hire those people to build infrastructure regardless of the debt ratio. On the other hand, if you issue public debt to purchase commodities that’s obviously inflationary. But in either case, the constraint is real resources and inflation, not the debt ratio. You asked why countries haven’t done this already? They have, it’s called quantitative easing and they do it in financial crises to absorb the productive capacity that the private market isn’t utilizing anymore.
- tanseydavid 2y ago
  >> and they do it in financial crises to absorb the productive capacity that the private market isn’t utilizing anymore. Oh, so the Central Banks can actually make use of "things" so that there is no waste. This is an absurd claim.

amrocha 2y ago

Of course that’s not what I’m arguing, please don’t straw man me. The constraint on public spending is the amount of real resources that can be utilized. Productive utilization of resources is not inflationary. For example, if you have 10% unemployment, a government can hire those people to build infrastructure regardless of the debt ratio. On the other hand, if you issue public debt to purchase commodities that’s obviously inflationary. But in either case, the constraint is real resources and inflation, not the debt ratio. You asked why countries haven’t done this already? They have, it’s called quantitative easing and they do it in financial crises to absorb the productive capacity that the private market isn’t utilizing anymore.

tanseydavid 2y ago
>> and they do it in financial crises to absorb the productive capacity that the private market isn’t utilizing anymore. Oh, so the Central Banks can actually make use of "things" so that there is no waste. This is an absurd claim.