No. of Recommendations: 2
Yeah, the funny thing is that “domestic holders” includes “intragovernment loans” and “the Fed”, which is basically “one part of the government owes another part of the government money, but it will never be repaid so fuggetaboutit.”
Ah, so if "the fed" doesn't count (somehow), all we need to do is to spend as much as we want, and issue all debt to the fed. Voila, problem solved.
Of course, it's all smoke and mirrors because none of that matters. When government spends money, that money comes from somewhere no matter what. Even if the fed creates it out of thin air, it still becomes part of the overall economy. If the government wanted to spend an extra $25T on something big, they could just go to the fed and ask for an extra $25T, and the fed would put $25T more on their books. But once the government has that $25T in their hot little spendthrift hands, the big question is - what will businesses out there charge for $25T worth of stuff? If suddenly there is an additional $25T of money, maybe all the previous money plus the new money might not be worth as much anymore (aka "inflation") and that $25T may only buy $15T of stuff. Now repeat that over and over and over and what happens in the end?
