[concordDance]

So when bond holders come by wanting their money do you not give it to them (defaulting) or do you just issue more (inflating)? Because those are your two options.

Note also that investors eventually get wise to inflation and start putting their money in gold or somesuch.

[dlp211]

We issue more bonds. And because we do issue the bonds and don't simply print the money, it is non-inflationary. This is because there is an asset backing the dollars instead of simply paying out the money, ie: the accounting book is balanced, there is an asset and a liability. It's only when you print money and give it away is the money inflationary. This is why we can continue to increase M1 and not see massive inflation. As the overall economy grows, there are more assets available to back the currency.