The danger is in failure to properly con. Where does. Do PhD students sometimes abandon their original research idea? So it makes sense if you think about how the math works in the real world. It's easier for them, they don't have to explain it to voters (only to economists), and it gives them more direct control without any messy political considerations like which programs to expand or cut. If inflation DOES rise and exceeds 2.5 percent, the Treasury will actually be MAKING money on its debt, since it’ll be paying back with dollars decreasing in value by more than the interest rate. If you did, you would be part of the “run on the dollar” that people ALREADY fear today. So: Under the Carbone scheme, as modified by me, the Fed creates $2 trillion new dollars, almost doubling the money supply, while of course keeping paying banks to hold onto the new money to prevent inflation. Take 2011 for example. ...The basis of monetary creation in our current society is debt. there'll always be some lag in determining what the money supply should be based on production. In 2010, my wild guesstimate of those two numbers, totaled, is about $2 trillion. It might have to hike the interest rate it’s paying, just to be safe. But since no bonds are of longer than 30 years duration (“maturity”), let’s imagine a gradual, 30-year process. That's your basis for the money supply. No. To subscribe to this RSS feed, copy and paste this URL into your RSS reader. First of all, the federal government doesn't create money; that's one of the jobs of the Federal Reserve, the nation's central bank. If government can borrow money at 2-3% (as it can right now) and the private sector can produce economic growth of say 4%, the government is better off than if it taxed that money away from the private sector. Best case it is theft of other people’s property. Will grooves on seatpost cause rusting inside frame? That’s an interesting question. The problem is that borrowing money also triggers monetary creation and thus inflation. Perhaps I will visit a library, they often have JSTOR access. The government borrows because it spends more than it receives in revenue, which comes mainly from taxes. In economic discussion, you may often hear that a government is "printing money" and then picture sheets of hundred dollar bills coming off a printing press. (I admit that many Eurozone countries also not allowed to borrow as much as they do now, but somehow that's considered a far lesser sin). Clean water is not available for a very sizable percent of the world's population. after US recession of 2008. Now, you can dream up reasons why the system should be the way it is and why it is an acceptable system. Index money on production and you have a sound system. Using production trends, determine projected production for the period and assign a $ value. However, this assumes that inflation will remain low. This is in fact a very important reason: it applies to the entire Eurozone. What are the Primary Dealers? ow, as to borrow money, there is a basic fundamental lack of understanding of borrowing. When governments need money to fund their operations, they may issue debt in their own currencies, but if they struggle to pay off the bonds, they can print more money. Originally Answered: Why do monetarily sovereign governments who can print their own money borrow it instead? People lost sight of good lending practices. If the government prints money recklessly and causes inflation, people will come to expect inflation, and the value of the currency will plummet, and you'll end up like Zimbabwe where a trillion dollars won't buy a loaf of bread. Is there any way to know how much new money the US is printing? Money is supposed to represent production. So now put two and two together. The reason it can do this — and this is the brain-melting part of MMT — is that taxes do not pay for government spending but are just a way of managing inflation. The dominant theory is "It just happened, it's nobody's fault and nobody designed it that way and to think otherwise is very bad because it makes you a conspiracy theorist, and conspiracy theorists are nuts. Admittedly, 90% of the world's wealth is concentrated in the hands of the most wealthy 10%. And what would I do the next minute? The new orthodoxy was that governments should instead rely on monetary policy. All Rights Reserved. @Ganesh: Indexing money on production is not necessarily circular. In general, you can count on the the principle that if you, as the government, try to play too many games with people's money... well, people aren't stupid; they will eventually catch on, and adjust their behavior to compensate, and then you're right back where you started, but with less trust. The government could actually do either one to expand the money supply as necessary to keep up with rising productivity / an increased labor supply. You can argue with this strategy: it may be keeping the banks from lending and fueling a recovery. If you heard that I — and millions like me — were about to do this, Mr. Carbone, would you not be tempted to do the same? The Federal Government has splashed more than $200 billion in support packages to keep the economy ticking over as the coronavirus halts trading for nearly all industries. They are banks. But right now, if the Treasury borrows the money for one year by selling a one-year “Treasury note,” it pays a measly .25 percent. Question: Why does the federal government borrow money through issuing bonds when they can simply create it via the “printing press”? Governments borrowing money doesn't create new money. (This is how they used to talk in the cowboy TV shows of my formative youth.) The question is merely political. Can you use the Eldritch Blast cantrip on the same turn as the UA Lurker in the Deep warlock's Grasp of the Deep feature? You are just not looking at them. No. This is real money that get's credited in to people's bank accounts to purchase real goods and services. It might be what is advertised, but it does not match the realities which we have to live with. For one thing, if bank deposits stay flat then no new money is being created. Unless there is an increase in economic activity commensurate with the amount of money that is created, printing money to pay off the debt would make inflation worse. In contrast when governments borrow money, the loan isn't repayable on demand, it has a fixed maturity and the money is only repaid at the end of that period (plus interest at defined points during the period). Central bank (the "Fed" in the US) "printing" new money (they press a button, literally get new money, and buy US Government Treasuries from banks), Commercial Banks making new loans (because of the. The U.S. government and its counterparts all over the world are spending trillions of dollars in response to the COVID-19 crisis, borrowing trillions of dollars to do so. Money is supposed to represent production. State and local investments in schools, roads, hospitals, and other infrastructure provide the foundation for a vibrant economy and high quality of life. You hear about it, but don't expect to see it any time soon. So even if everyone g… The housing bubble had multiple causes. PS: about deflation. Economics, as a subject, is the proper management of resources and production. This question is raised in the movie Money as Debt (at time index 29:00). Biden’s economic team faces unprecedented crises in shift from Trump, Why the pandemic is forcing millennials to move back home with their parents, Here’s how it feels when COVID-19 symptoms last for months, ‘All my love, Elliot’: ‘Umbrella Academy’ actor comes out as transgender, Trump files lawsuit challenging Wisconsin election results, Georgia elections official urges Trump to rein in supporters, CDC to shorten COVID-19 quarantine to 10 days or 7 with test, No breakthrough in India’s talks with protesting farmers, Salesforce to buy work chat service Slack for $27.7 billion, U.N. says pandemic will likely cause surge in humanitarian needs in 2021. Who benefits? After all, the world is fair, governments are working in our best interest and if they do it this way, they must have a very good reason for it.". First, Milton Freidman set out a monetary system in a paper in the American Economic Review which involved no government borrowing, and govt just printed money (in a responsible fashion of course) as and when needed. The problem with making that target 0% is that then whenever you undershoot you'll have deflation which has its own problems. And if they do, I don't believe that creates new money. Yes - Simply put, printing money is called "monetizing the debt" and would result in some nasty inflation. Most of the debt doesn’t come due for years. @Ganesh: very interesting, so can we say that the bank system is basically generating always inflation? Instead under government control their output has slumped from a fairly poor 2.5 million barrels a day five years ago to a bare 400,000 barrels a day now. What prevents a large company with deep pockets from rebranding my MIT project and killing me off? However, according to this movie, money is created not only by printing it but rather more so by borrowing it (watch the movie for the details). A Chinese engineer earns a fraction of what a similarly qualified engineer earns in the States. For example, think of those special vintage Star Wars toys from the 1970s, which can be worth a lot of money. The reason why the federal government doesn't print its own currency is also because it is simply set up incorrectly. From Dec. 2008 to March 2010, the Fed bought $1.75 trillion in bonds. (When printing money, one doesn't need to pay interest). Creating debt is simply dumb — it creates no more inflation than creating money. Why is the pitot tube located near the nose? The total amount the government has borrowed is known as the national debt or public sector debt. By using our site, you acknowledge that you have read and understand our Cookie Policy, Privacy Policy, and our Terms of Service. When transferring money between two parties, under what circumstances is it considered taxable income? Sorry, but that not the case. Dec 01 The federal government in a sense does print its own money when it spends money and doesn't collect it in taxes, so in a sense the national deficit is just a measurement of total government printing. Printing money – Why does the government print money? $1,000 of debt and $1,000 of created money are both the same claim on our wealth — but the debt adds interest and is thus more costly to us. When banks "borrow" money (i.e. site design / logo © 2020 Stack Exchange Inc; user contributions licensed under cc by-sa. The US, for instance, owes around $5.6 trillion to a number of its own federal agencies, which accounts for nearly 30% of the total federal debt. Why does a loan need so many parameters? Would it be possible for a self healing castle to work/function with the "healing" bacteria used in concrete roads? Keynes said of Lerner, “Lerner's argument is impeccable, but heaven help anyone who tries to put it across to the plain man at this stage of the evolution of our ideas”. U.S. Bureau Of Engraving And Printing - BEP: A U.S. government agency responsible for printing the paper currency, Treasury securities and specialty … https://www.pbs.org/newshour/economy/why-does-the-us-government-bor. “Why do governments borrow money instead of printing it? When the Govt spends $1.7 trillion and credits our bank accounts, the banking system has $1.7 trillion more. How about foreign debt? Does this strike you as the logical result of a fair and balanced economic system? Why do governments borrow money instead of printing it? Unfortunately, for every actual dollar currently out in the world at the moment, there would suddenly be about four. A second Nobel Laureate with similar views was William Vickrey. Why does a government borrow money? Now who purchases the majority of treasuries? Firstly, printing money just collapses economies generally. Then the natural question now is why government prints more money when it is not creating any value for the economy. If so, how do they cope with it? To see why, we’ll suppose this isn’t true, and that prices will not increase much when we drastically increase the money supply. Can the automatic damage from the Witch Bolt spell be repeatedly activated using an Order of Scribes wizard's Manifest Mind feature? How can a hard drive provide a host device with file/directory listings when the drive isn't spinning? © 1996 - 2020 NewsHour Productions LLC. Let’s say, however, that it can get away with keeping the rate it pays at .25 percent. If a country prints more money without making more things, then prices just go up. Is inflation a good or bad thing? This country with the world’s largest oil reserves decided nationalising their golden goose would finance their governments wild excess. Is it considered offensive to address one's seniors by name in the US? And they do it by the trillion. The thing is that some governmental agencies, such as the Soci… I'll expand a little by mentioning "Quantative Easing" which is the. Thus far, those several trillion have NOT caused runaway inflation and a run on the dollar, because – and this is a crucial point that most people simply don’t realize – the newly created money has stayed inside the U.S. banking system. And yes, I believe both can create inflation. Printing money and national debt. Debt is a transfer of accumulated wealth from someone to someone else. it will also cause inflation which mean that no one will want to work for production again. Many entrepreneurs aren’t aware of this surprise benefit … Zimbabwe). Essentially, the government borrows so that it can enable higher spending without having to increase taxes. In that case they have three options: increase taxes (which has the risk of scaring off multinationals, putting small companies out of business and driving the economy into a recession) But if the purpose is to keep a lid on inflation, well, that sure seems to be working. The obvious reason why government wouldn't massively print money is not only because of inflation, but currency value. My answer is that when confronted with the obvious, the most common human reaction is to seek reasons for it, because things have to be right. US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go The Federal Reserve is creating dollars from scratch at … Printing money, or money creation, most often involves creating money that is not physical. The Federal Reserve is often said to be a government entity. Dec 01 You really haven't looked where your stuff come from, have you? @Marco: not really, it's much more complicated than that. The Govt spent $1.7 trillion more than it took in. Subscribe to ‘Here's the Deal,’ our politics newsletter. Borrowing and printing money. States and localities borrow to pay for infrastructure, rather than use annual tax collections and other revenues, for sound reasons. Figure out how to cash in any dollars I had in exchange for other currencies or assets (houses, cars, foreign stocks) that weren’t poised to plummet in value because the supply of them had suddenly soared, as with U.S. dollars. Paul Solman: Great question. Why do you think that is? Who first called natural satellites "moons"? Hey, we save the interest payments, which amounted to nearly $400 billion last year! Why did congress turn its monetary policy over to the Federal reserve (a group of unelected and unaccountable individuals with strong ties in the banking industry) and does not even bother to conduct audits to know how your money is actually managed? In a sense Tucson is right. The Fed is paying a small — .25 percent — interest rate to induce the banks to keep the money out of circulation, as we’ve tried to explain both on the air and on this page. But don’t you see the difference? The government can borrow huge amounts of money because it has a big capacity to pay it back — because it's got millions of taxpayers giving it money every day. Nov 27 They have the entire literate and qualified person advising them to keep printing money i.e. Manage it over time to keep the money supply on par with production. In reality, this is not what actually happens in every sense of the term. Think about it logically. When 50% of treasury bonds are bought by the federal reserve, what do you think happens next? Fed funds are what banks are required to hold in reserve each night. The Treasury isn’t borrowing only in short-term increments. Why “N-year” loans (and other complications)? Because private banks rule the monetary system the rest of us, including the govt, are rendered as users of the private deposit system. Dec 01 When the Fed wants to "print money," it lowers the target for the federal funds rate. Question: Why does The U.S. government borrow money and thereby create debt when it has the sovereign and Constitutional right to create whatever money we NEED? It can be done. When a suit typing a few numbers in a computer can make more money in 5 minutes than an average Joe can make in 100 lifetimes of honest, productive work, you don't have a fair economic system, you have a scam machine. In that case, borrowing money from banks also creates money - can't this this cause inflation as well? It didn't just happen. Now, forget the fancy theories, the elaborate nonsense about stocks and bonds and currencies and pay attention to the actual situation. Most people, even in rich countries, have a negative net value. When you look at a system as broken as the one we have, you shouldn't be asking yourself "what makes this system right?" Money left in private hands is invested in economic activities that will produce greater future tax revenues for government. So holders of government debt don't have money they can spend (they can turn it into money they can spend but only by finding someone else to buy it). Debt? What do you think happens when the federal reserve buys $XX billion in treasury bonds? No (although this could actually be better than the 2 previous suggestions). One last objection to be dispensed with. Because monetary policy, and fiscal policy, are each complex enough on their own, when analyzed separately. That’s because of the several trillion dollars that have been created by the Fed during and after the Crash of ’08. Trump files lawsuit challenging Wisconsin election results, By Michael Liedtke, Matt O'Brien, Associated Press, By Jamey Keaten, Edith M. Lederer, Associated Press. Question: If the federal government (and/or Treasury) can just create money, why does it have to borrow it from other countries? Let’s suppose the United States decides to increase the money supply by mailing every man, woman, and child an envelope full of money. The Fed can’t actually quadruple the money supply by eliminating (“retiring”) the debt right away. Question: Why does The U.S. government borrow money and thereby create debt when it has the sovereign and Constitutional right to create whatever money … Learn more about Friends of the NewsHour. But that’s exactly the same amount it’s paying the banks to redeposit money with the Fed! What would people do with that money? Paying interest on debt reduces tax burden. Why is it so hard to get a quality loan as an individual? So printing money is not a solution for anything. But - the over the top underwriting had more impact in my opinion. Gold? This makes it safe to print more money, so that people can buy those extra things. As people rush to get rid of the old money before it loses too much value, those words can fuse into WORTHLESS. It does increase domestic money supply, doesn't it? (deflation = lower prices/salaries => lower tax brackets => higher purchasing power) Unless you are living on borrowed money, deflation is something you should welcome... but it's not gonna happen if we keep printing money like mad. A third economist with similar views (of Keynes’ era) was Abba Lerner. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people. Create a basket of key products (not unlike the basket of products used to calculate inflation). (Also, inflation expectations are low, so people will accept 1-2% interest rates. See: http://www.jstor.org/pss/1810624. "Most countries operate an inflation target which does seek to close this feedback loop and keep money in line with production" is incorrect. Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. Foreign investors, too, have been pulling out and rushing to “safer” economies like the US, and are unwilling to lend in times of such uncertainty. Interesting. Moreover, as the government borrows more from the market, it pushes up the interest rate. There are many different reasons for government borrowing. I believe there are two ways new money is created: My favorite description of this (money creation) comes from Chris Martenson: the video is here on Youtube. What you should be asking yourself is more along the lines of "Why is it broken? Consider the case of the United States. 开一个生日会 explanation as to why 开 is used here? Building algebraic geometry without prime ideals. Dec 01 Thank you. The annual amount the government borrows is known as the budget deficit. Now, inflation can come into play afterward, if the Fed decides it needs to maintain "easy money" policies to stimulate the economy (because taxes are too high because we're paying off the debt, or because we've crowded out smaller borrowers, or something). Here’s how it feels when COVID-19 symptoms last for months, Read take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. If you expected inflation of 10%, you'd see people demanding something more like 12% interest rates. Its like a bank. Simple example: Do you think the US produces 3 times as much as China? If everyone did actually ask for their money back at once, the illusion of the extra money created by this process would collapse, and the bank would go bust. Too bad I can't access the full paper. For deflation to actually occur, the volume of production should increase faster than the volume of money (per definition). It only takes a minute to sign up. I am not sure... Not loan, borrow. en.wikipedia.org/wiki/Quantitative_easing, MAINTENANCE WARNING: Possible downtime early morning Dec 2, 4, and 9 UTC…, “Question closed” notifications experiment results and graduation. In the case of the US, printing money involves convincing politicians to spend it. Look up "money supply" on wikipedia for example. In essence, the several trillion has been deposited in U.S. banks, which have REdeposited the new money back with the Fed. It's a no-no as it quickly devalues the currency and makes it far more difficult to borrow in the future, an entire generation will remember getting burned by it. In this case, my question is the question the movie raises: Why do governments borrow money instead of printing it? Randomly printed by the government when they feel like it? The answer that immediately pops to my head is "because printing money causes inflation". This brilliant movie, Money as debt, points to a number of outrageous bugs in our economic system. Double your gift to PBS NewsHour by midnight! We had to physically give China 1 trillion dollars for them to be able to purchase 1 trillion dollars in securities. If, say, Canada's currency were suddenly worth half as much and you received half your investment back in US dollars (e.g. Because the goverment has a national wealth. Does a regular (outlet) fan work for drying the bathroom? Or you can look at the fact and realize that there is NO JUSTIFICATION for an economic system that perform as badly as it does. No one is making any more of these models. That doesn't happen when money is created by the bucketload, and when it is contrary to the best interests of the powers that be. Which of the four inner planets has the strongest magnetic field, Mars, Mercury, Venus, or Earth? Once-fringe ideas in economic theory are now nearly official policy as government borrowing surges and the Federal Reserve signals it could buy unlimited debt. Most people are broke. A country can borrow money from its own governmental institutions and subsidiaries. Most countries operate an inflation target which does seek to close this feedback loop and keep money in line with production, albeit with a built-in offset rate. If needed, a bank will borrow fed funds from another bank to meet the requirement. How do I place the Clock arrows inside this clock face? Bonds are a form of saving. In that case, the Fed could simply refrain from borrowing the new amount it needs every year to cover the annual deficit between spending and revenues, and also refrain from borrowing to pay for any debt that has to be redeemed as it comes due. (When printing money, one doesn't need to pay interest).” Good question. My own simple answer is that it will affect and reduce productivity (e.g. Please check your inbox to confirm. you paid US$10,000, but now have US$5000) would you ever trust them again? Does this look like a random happenstance? In that case, it SHOULD borrow, right? But of course that’s the equivalent of taking out a super low-cost mortgage these days. PS the government prints money all the time one branch gets the fed reserve notes and one branch gets the bond. The demand for loans is impacted both by the rate itself and the bank's willingness to lend. Where do banks get their money? Incremental Money Supply Because it’s so cheap to do … Why isn't it done that way? When the economy slowed, monetary policy would loosen, making it cheaper to borrow… It's in every basic textbook on the subject of economics. No. New money makes old money worth less. Who would lend money to / invest in a small business, if the government is paying good money and there's almost no risk at all?). Governments regularly run a deficit when the money they take from their citizen in the form of tax is less than the money they spend. In other words, inflation: everything suddenly quadrupled in price. Back to basics. You did not directly answer my primary question (in the title). The Primary Dealers. So retiring the debt by issuing more dollars — in today’s environment — wouldn’t save any interest payments at all! If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people. The Government doesn't borrow money. On the other hand, the Fed can simply bypass the politicians, and control the money supply directly by issuing bonds. The option rate interest only ARMs were financial time bombs. We don't like it when things suck. Then that money flows in to pension funds, gets spent in to corporation who then send that money to China for cheap products... and eventually the money spent purchases up Govt securities for investments. Governments borrow by selling government bonds/gilts to the private sector. Suppose we could do as you suggest, and simply take the $8 to $9 trillion that the US owes to anyone besides its own trust funds and pay back all the bondholders, here at home and abroad. @Ganesh: What does the US produce, these days? To get richer, a country has to make and sell more things – whether goods or services. They have mortgages that run for a third of their lifetimes, credit card debts, loans... do the balance. How to avoid boats on a mainly oceanic world? Why is a third body needed in the recombination of two hydrogen atoms? So there isn’t enough money in the market for the government to borrow. Paul Solman: Interesting question (or “comment”). The system is rigged. Stack Exchange network consists of 176 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers. Answer: The way I describe it is that the monetary system in the USA is bank centric. But wait just a cotton-pickin’ second. Subscribe to Here’s the Deal, our politics newsletter for analysis you won’t find anywhere else. Why the pandemic is forcing millennials to move back home with their parents, Read Sounds good, right? In fact this is what happened in the US between 2004 and 2007: increasing loans to households to buy houses created an inflation of home prices. You have the facts. New money is wealth created from scratch. So, what should money creation be based on? Directly indexing money on production would be circular, because money is also needed to determine the relative value of different goods and thus the value of the production as a whole - i.e. They state on their website that they are an "independent entity within government." Look at the facts already in your possession. If the government actually pays people for the money they borrow, they don't have this problem - and as it turns out, the US government can get pretty good rates on borrowing in general, in part because they're extraordinarily good about paying them back. Debt is NOT correlated to production, and interest ensure that there can never be enough money on the market to cover the total debts. ah yes... the question... :) Well, I don't think governments loan much money. ), (The downside of too much of this sort of borrowing is that it "crowds out" other borrowing, which may harm the economy. @Ganesh: And where exactly does the money that the government borrows come from? Why do governments want some inflation? I guess there IS a twist on your idea. Can I use deflect missile if I get an ally to shoot me? If your bank account only has 10 dollars in it, then you only have 10 dollars. On our planet, most people earn $2,000 per year. They have to have a reason. When it borrows for ten years, for example — “10-year Treasury notes” — it’s paying more than 2.5 percent. So when finding out that you are being ripped off every day of your life, your reaction is "There must be a logical reason that perfectly explain why this is. The economy is far more complex than one can discuss here, but the fractional reserve system is the next creator of money, although it's not unlimited, the reserve requirement throttles it back. And that’s your point. Anything we do to make houses more affordable can cause house price inflation. Now I don’t know about you, but here’s my fear the minute I hear that’s going to happen: that any given dollar would be worth 1/4 of what it had been before the debt-to-currency transformation. rev 2020.12.2.38095, The best answers are voted up and rise to the top, Personal Finance & Money Stack Exchange works best with JavaScript enabled, Start here for a quick overview of the site, Detailed answers to any questions you might have, Discuss the workings and policies of this site, Learn more about Stack Overflow the company, Learn more about hiring developers or posting ads with us, I like this answer. Yes, you read right: .25 percent! One important answer is still missing: governments may not be able to do print money because of international agreements. Our current money supply is utterly disconnected from production fundamentals. The general consensus is that just printing the money is politically less palatable than issuing the bond and having the central bank buy the bond to retire it. Why does Taproot require a new address format? You are not nuts are you?". (Note - I am asking an objective question, regardless of how objective the movie might or might not be). And then you end up like Zimbabwe, with 10-trillion dollar notes that are worth $5 today and a nickel next week. If the money supply were left in their hands, we would end up with a shrinking money supply and rapid deflation. So government debt doesn't create inflation in itself. Numerous leading economists, including a couple of economics Nobel Laureates have asked the same question and concluded that borrowing can be dispensed with. You want to stop the Treasury from BORROWING. While we currently run a deficit, there is a large lobby within the US who are incredibly anti-deficit, and are fighting against this for no good reason. ‘All my love, Elliot’: ‘Umbrella Academy’ actor comes out as transgender, Read How do I respond as Black to 1. e4 e6 2.e5? You could look it up. Continue Reading. Yeah; if you do enough inflation - a lot like stealing money from people who have it already - people will wise up to it, and start anticipating inflation, and not want to take your money. The bond market is used for an advanced way of controlling the demand for this printed money. The government budget deficit was $984.4 billion in fiscal 2019. Why do governments borrow money? People buy government because they assume a government bond is a safe investment. If you have a thing for fancy words, you could say that 30% of the US national debt is locked in intra-governmental holdings. Mostly by issuing treasury bonds. Biden’s economic team faces unprecedented crises in shift from Trump, Watch The Fed tries to influence the supply of money in the economy to promote noninflationary growth. ELI5: Why does the government borrow money from the Fed at interest when they have the authority to print it themselves? In. From us. Is there a word for "science/study of art"? SO the answer to the question is the government wants to control the rate and perception of inflation that is why they borrow instead of print money!! It in fact simply prints it. Watch

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