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by RuadhanMc
5419 days ago
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It was a poor choice of words on my end. I take your point that America will always be technically able to print money in order to pay back the debt. But wouldn't printing that amount of money destroy the value of the US dollar? Causing all sorts of other issues? |
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I think it depends entirely on how and why the debt is paid back. We probably agree that the act of paying back the principal of some bond cannot have an inflationary effect if the owner of that bond just uses the money to buy the next bond, so it's not the act of printing the money itself that causes inflation.
If they use the money to buy other things then this might cause inflation if it happens at a large scale, say the hypothetical spending spree that I wrote about in the parent post.
The thing is, since it is pretty much impossible to predict when and how such an event is going to happen, and the best remedy likely depends on that knowledge, it seems unwise to me to cause damage to the economy right now in a (probably ultimately futile) attempt to prevent such events from happening in the first place.
It seems even more unwise to cause such damage since such an event may never happen anyway. After all, it is actually very rare for a government to (net!) pay back part of its debt, and paying back all debt is almost unheard of. Except for the rare times of government surpluses, the US government has never actually net paid back its debt over quite a long history by now, and I see no reason why that should change in the future.
After all, there is significant evidence that government surpluses cause recessions: http://www.newdeal20.org/2010/02/10/the-federal-budget-is-no...