[its_ethan]

Isn't a treasury bond still "doing something" though? Since they are effectively loans to the government it is in theory being used to fund gov services ("doing something") so that they don't print more new money, versus sitting in a bank account where it's really doing nothing, but still increasing it's purchasing power?

[MichaelBurge]

It's 20x more dilutive to print $100 than to sell $105 for $100, sure. I wouldn't describe that as "funding government services" in the common sense, though you could argue that with a fixed dilution target it does counterfactually cause more spending and thus services.

And similarly, somebody stuffing money under their mattress would be removing 20x the amount from circulation as they gain, with 5% deflation. So while one can easily imagine the 5% is financially equivalent to interest, the effect on the circulation isn't.

"Remove money from circulation" seems different than simple funding of services, though. It's not even obvious there should be any difference there, if the money were infinitely subdivisible. I don't think using personal finance equivalents like funding goods and services is sufficient to explain the effect.

An economist has probably written something in excruciating detail, making sure there's no shell games being played with the terms. So it's probably on me for not reading that instead of commenting here.