I don't think anyone does expect the debt to be paid back. However it is expected and required, that at the very least, interest payments on the debt are paid so there isn't a default, which would kill the bond market and end government deficit spending.

Interests rates do not need to increase very much at all at this point, so that 100% of tax revenues would be needed just to cover the interest owed by governments. At this point (actually before) the currency is effectively dead and hyperinflation is inevitable, unless:

1) there is a draconian cut to government spending to match tax revenue, or 2) the current system is abandoned to one that is backed by hard assets (which would include a severe cut in spending but could also include a taper)

1. is politically infeasible, so we will default to 2. after a significant amount of economic pain. The US Dollar and most western fiat currencies are dead and are already long in the tooth by historic standards.

> However it is expected and required, that at the very least, interest payments on the debt are paid so there isn't a default, which would kill the bond market and end government deficit spending.

Russia defaulted in the late 1990s and a few years later people were lending again (at higher rates). Greece had many well-publicized problems in the earl 2010s, and yet in 2019 their bonds had negative yields:

* https://apnews.com/article/067eda5047d740f9a15692dea5944326

If the ECB buys the debt (it has an infinite supply of money after all), what is the problem? That should keep interest rates on sovereign debt down. Inflation right now is systemic, mainly the result of oil price surges - I'd argue that its OK, we want high oil prices because we want disincentives on activities that produce more CO2 and incentives for efficiency - hell, hike the price now. Of course the downside could be social, and that falls on governments to mitigate, which is why I argue strongly that they continue to heavily deficit spend and they get the support of the ECB to do so.

>Of course the downside could be social, and that falls on governments to mitigate, which is why I argue strongly that they continue to heavily deficit spend and they get the support of the ECB to do so.

Which will then build up more pressure until something finally goes wrong and your economy implodes. The consequences aren't just social that the government can deal with. Look at the 1930s. There's a real chance that a poor economy for an extended period is going to change your democracy, if you remain a democracy at all.

The ECB can only buy the debt by creating more money and increasing inflation. It might be hidden for a while, but just because we don't know how to measure it doesn't mean it won't eventually show up in an unexpected place (or managing it will depress the economy long-term).

Italy's debt is almost 160 pct. of GDP and Italy's GDP stagnated over last 20 years. And budget deficit is very substantial (and will grow in comming recession)...

It means that Italy could afford to roll-over its debt only due to European Central Bank suppressing for years yields on Italian bonds. But now market yields go up as ECB is set to raise rates and withdraw QT.

If Italy were to pay market rate on its debt it would bankrupt its budget. Most of Italy's revenues would go toward coupon payments of debt leaving very little for pensions, infrastructure, healthcare etc.

So it is not about not repaying debt but about Italy's inability to roll it over in the markets.

Single currency and single central bank in eurozone implies policy fragmentation - ECB has to address different issues at the same time. High inflation in the North and stalled growth with high yields in the South.

If Italy were to pay market rate on its debt it would be negative as the implementation of negative intereset rates on cash reenables the market mechanism of allowing a debtor choose how much he wants to be in debt. The 60% debt to GDP mandate of the eurozone could become obligatory and would result in all EU countries refusing to take on more debt, forcing the interest rate into deep negative territory.

The only problem with debt and CB debt monetisation is what the debt is used for. If its used to keep pensioners solvent, social safety nets functioning, food on tables, education regardless of social class and general access to healthcare - then its absolutely fine by me (and most Europeans, I'd wager.) It should continue and increase, as necessary, especially if sovereign debt markets fail. The one policy that counts (and it affects north and south EU) is climate change. Debt, as a license to run dirty industry (public and private) and maintain fossil fuels, will need to be heavily reined back in those sectors as part of the quid pro quo for sovereign debt monetisation largesse. More europeans working shorter weeks, travelling less, but still enjoying social mobility and all the social needs from high spending countries (supported by ECB) is absolutely OK, just build a low carbon future - no more debt for dirty industries, or dirty imports. Smart, healthy people, backed by possibly heavily indebted countries supported by ECB in perpetuity, is frankly no problem.

> If its used to keep pensioners solvent, social safety nets functioning, food on tables, education regardless of social class and general access to healthcare - then its absolutely fine by me

So as long as its unsustainable it's "absolutely fine" by you? As long as its someone else paying for you, i guess its fine to fuck them over huh?

Who is paying for or fucking whom over? The only true unsustainable conditions are ones in the real world - broken environmental conditions, broken supportive social institutions; money is virtual and is just a tool (for measurement, standard for deferred payment blah) - money supply should be the servant, not the master of economic & social health. Anyway, arguably inflation will decrease debt value relative to inflated GDP, making it easier to pay down, as long as CBs step into sovereign debt markets to prevent runaway interest rates on existing debt.

>Who is paying for or fucking whom over?

Future generations are the ones getting fucked over, because they are the ones who will have to pay for the subsidies you're wanting for your pet project.

It's clear you haven't got a clue of the actual long term effects of your proposed policies. I recommend you read Basic Economics by Thomas Sowell, if only to understand that the policies you propose will have consequences.

So, a couple of trillion upfront for Europe's part of a decarbonised economic future, whose states have splurged on massive green economic infrastructure and managed to sustain social wellbeing in the interim, so the children of tomorrow breathe clean air, live in solar/wind powered clean houses, cheap and plentiful subsidised education and work in clean industries, at the cost of some temporary price increases and a higher tax rate down the line (maybe), is somehow worse than continuing toward environmental destruction, circling the wagons around private wealth (and lower tax)? Read some Marx, at least understand what alienation is.

>Read some Marx, at least understand what alienation is.

I have, that's when i realized he had nothing useful to say.

The article doesn't talk about trying to pay off the debts at all. You have invented a straw man out of thin air to attack instead of engaging with the article at all.

Also, your "banks aren't households" argument, while deeply flawed, is useful to explain some very introductory concepts to people who don't understand rhe basics of how a central bank operates but has absolutely nothing useful to say about the very real dilemma central banks are facing.

Holy shit that's your mind on MMT