I get your point, but they cant just “print” currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.
Then stop selling bonds and start investing directly (build schools, repair bridges, pay your employees, etc.).
Countries don’t have to take the detour through state bonds because they can make money out of thin air. State bonds are a self-imposed and there’s no law of nature that mandates using them.
Serious question? Money today is nothing more than a number in an account. When a country needs more of its own currency, it can increase it’s account by that amount.
Okay, but even if the USA can’t change the law regarding states bonds, it is virtually impossible that people stop buying US states bonds since the US Dollar is kinda like the most established currency in the world.
I hear what you are saying, but that is changing, america is losing its strangle hold on the world. That became most evident with what we tried to do with Russia after their invasion and the cracks in our system are starting to become more obvious. Unless you think that the US will be the worlds reserve currency forever, there will be a time when it falls.
I get your point, but they cant just “print” currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.
No, that is not true. That states sell bonds is a self-imposed rule.
As long as a state collects its taxes in its own currency there will be demand for that currency.
What happens when they run out of people to sell bonds to and they run out of money to tax?
Then stop selling bonds and start investing directly (build schools, repair bridges, pay your employees, etc.).
Countries don’t have to take the detour through state bonds because they can make money out of thin air. State bonds are a self-imposed and there’s no law of nature that mandates using them.
How do they make money out of thin air?
Serious question? Money today is nothing more than a number in an account. When a country needs more of its own currency, it can increase it’s account by that amount.
No they cant, that is illegal. You could say they will change the law so that they can do that, but that is not possible (in america) at this time.
Okay, but even if the USA can’t change the law regarding states bonds, it is virtually impossible that people stop buying US states bonds since the US Dollar is kinda like the most established currency in the world.
So your argument is completely theoretical.
I hear what you are saying, but that is changing, america is losing its strangle hold on the world. That became most evident with what we tried to do with Russia after their invasion and the cracks in our system are starting to become more obvious. Unless you think that the US will be the worlds reserve currency forever, there will be a time when it falls.
Sooooo it’s a self imposed limitation, just like u/sockenklaus said?
Kind of, but if the US allows itself to just print dollars directly its directly going to turn to toilet paper.