Government debt is completely irrelevant as long as the debt the government has is in its own currency that it can print more of. US government can print however much money it wants.

It will never default because it can just create the credit. That’s what the Federal Reserve did with its zero interest rate policy. It distorts the economy, and the economy can shrink and be torn apart, but the government can always pay its debt by simply printing the money.

The real problem lies with private debt, and that's what's actually leading to a default. When people default on their debt, they end up forfeiting property to the creditors. What we’re seeing now is a large scale transfer of property such houses and cars that people had bought, and so on, that they can no longer keep making payments on. this results in a transfer of income from the 90% to the 10%.

Government internal debt is a problem too because while, sure, you can print your way out of it, you are still devaluing the currency repaid.

Take social security for example. You can print money to repay all the money borrowed from the fund, but in doing so, you have debased the currency it pays out.

If a retiree is owed 100$, you pay it with printed money, so in theory they are made whole, but it no longer has the same purchasing power. It is a rug pull for the retiree.

That's not how fiat currency works. There is no direct relationship between the amount of currency in circulation and the value of the currency as expressed in the price of goods and services. The prices are set by people who own businesses based on how much they believe their consumers are willing to pay them.

nonsense. Double the currency in circulation and hold goods constant and you will deflate your currency. There is a clear and direct relationship.

You can expand the money supply and amounts in circulation without inflation in the exact case where you expand the value goods and services in equal measure.

Even then, the purchasing power of currency holders is less than the counterfactual where the money supply was not expanded and you had deflation as a result.

Money drop a million printed dollars on each consumer, and prices will skyrocket.

Are you trying to tell me that the expansion of the money supply in Venezuela has no direct relation to inflation.

Once again, inflation is a result of business owners choosing to raise the prices. If money that's created goes directly to consumers, then it allows business owners to raise prices on goods. However, that's not what's happening when US government is printing money to pay off its debts. You appear to have an incredibly superficial understanding of how money supply works, and you appear to be just regurgitating tropes you've memorized.

>If money that's created goes directly to consumers, then it allows business owners to raise prices on goods. However, that's not what's happening when US government is printing money to pay off its debts.

This is exactly what happens when the government expand the money supply to repay debt. It send out social security checks, pay workers, and buys goods. This puts money directly in the hands of consumers.

You even agreed we are talking about an increase in the money in circulation. Are you walking that back and saying that money in circulation doesn't give consumers more money? The creditor of Government debt Is citizen consumers with benefit obligations.

What about Venezuela? Consumers don't have more currency there either?

> This is exactly what happens when the government expand the money supply to repay debt. It send out social security checks, pay workers, and buys goods. This puts money directly in the hands of consumers.

Not really, because most government debt isn't consumer debt. US isn't increasing money supply to pay for social security or to pay workers. It's increasing things like military contracts for large corporations.

> You even agreed we are talking about an increase in the money in circulation. Are you walking that back and saying that money in circulation doesn't give consumers more money? The creditor of Government debt Is citizen consumers with benefit obligations.

I'm not walking anything back. I'm saying that the currency that's being created isn't going to the hands of regular people. This is obvious from the fact that majority of the working population can't even afford to live on the salaries they make forcing them to take on debt to buy essentials

https://finance.yahoo.com/news/jaw-dropping-stats-state-cred...

> What about Venezuela? Consumers don't have more currency there either?

Venezuela is under a brutal blockade by the US, and that's the actual source of most of the problems there.

>Not really, because most government debt isn't consumer debt. US isn't increasing money supply to pay for social security or to pay workers. It's increasing things like military contracts for large corporations.

You are confusing the debt owner, and where the money was spent. The governments make create internal debt for a military contract, but the debt is held either by the public (e.g bonds), or intragovernmental ( e.g. borrowed from the social security fund) When these get paid back, they go into circulation.

Besides, Most government spending goes to salaries and benefits.

I'm not, as the link I provided you with clearly explains, personal wealth in US is decreasing. It's now at the point where people have negative assets because they're forced to borrow to meet their basic needs.

If what you claim was happening then we wouldn't be seeing this happening. If money went to salaries and benefits, then workers wouldn't be under water financially the way they are right now.

"You appear to have an incredibly superficial understanding of how money supply works, and you appear to be just regurgitating tropes you've memorized."

The irony is off the charts.

an amazing counterpoint you've mustered there

There is no relationship between money and inflation because the money doesn't go to the pockets of people who can spend money. The extra money goes usually (the covid programs are an aberration) to the pockets of the financial elite, and they become stocks and other financial assets. The price of these assets go up, so there is asset inflation, but not real product inflation. The characteristics of fiat money work because the created money is really going to the pockets of the rich to inflate their net worth.

Sure, that's part of it, and the other half of the equation is that when economic crashes happen the rich use their liquid assets to buy up physical assets that everyone else if forced to let go this concentrating tangible wealth with the capital owning class.

> A one time expense of 8% GDP for a 4% growth is great. That means it would get paid back in two years (...)

Not quite. The payback time will depend on the growth in government revenues, which should be correlated to GDP growth, but a fraction of it.

It's also ignoring interest.

Borrowing $8 to make $4/year is a good investment as long as interest is less than 50%

even if it doesnt increase revenue, it can be a good investment.

The purpose of the government isnt grow, it is to serve the people