[_heimdall]

Its only an accounting mechanism rather than fraud because there's no one to enforce it. I've never understood how a government being so massively in debt to itself isn't seen as a joke proving that the whole thing is a sham.

Its one thing when outside parties offer debt to a government, its effectively a show of faith in the government to pay its liabilitirs and still exist long enough to do so. Buy what does it even mean for a government to extend debt to itself?

[silverquiet]

I always think about it like how you're never supposed to use a self-signed TLS cert, but all the root certs are self-signed (because who else would sign them?). I always think of the fed as the root authority in our implementation of fiat currency.

[david-gpu]

> But what does it even mean for a government to extend debt to itself?

You may be interested in reading about Modern Monetary Theory (MMT).

I'm not an economist, but had a mild interest in macroeconomy some years ago and found MMT eye opening.

[_heimdall]

Oh I have read about it, I just fundamentally disagree with both MMT and Keynes.

What I was trying to ask there is what does it mean for debt to exist when there is no relative risk?

When a third party extends debt in good faith, it says something about their estimation of risk.

When a government extends debt to itself it literally means nothing, if one party fails they both do. More importantly, there's no recourse if the debtor defaults. The debt there exists purely as smoke and mirrors, it is created only so they can claim money wasn't made out of thin air.

[david-gpu]

> When a government extends debt to itself it literally means nothing

I get where you are coming from. If I'm not mistaken, and according to MMT, a government buying its own debt induces future inflation and a decrease to interest rates.

All money nowadays is fiat (i.e. created out of thin air by a few actors), so it's not like any form of money creation and destruction means much more than changes to the inflation rate, interest rate and the derived swings to the economic cycle.

[_heimdall]

Yeah that's my understanding how MMT would explain the system as well. I just take issue with that approach.

When you peak behind the curtain and see how an MMT system actually works, it's pretty clear that the whole thing is just for a game and, at best, a benign one.

As long as it isn't hurting anyone, I can see it being plenty useful given what we can do with it even if the system is just a game. As soon as the system starts harming people though, say because they can't access basic goods or live a happy life, simply because of how the game works then it skips right past being an entertaining game and into the realm of being a dangerous, arguably evil, weapon.

[cen4]

Covers it quite well - https://michael-hudson.com/2023/07/global-economic-history-i...