Pluralistic: Blue Bonds (04 Oct 2025)

pluralist
1

Originally published at: Pluralistic: Blue Bonds (04 Oct 2025) – Pluralistic: Daily links from Cory Doctorow



Today's links


A US $100 bill, tinted blue. Benjamin Franklin has been replaced with the bear from the California state flag.

Blue Bonds (permalink)

The US economy is on the brink. Trump's illegal clawbacks of federal spending (waved through by a supine Congress), combined with his illegal tariffs and his government shutdown have sucked billions out of the economy, which was already much-weakened by proliferating crypto scams and AI stock swindles.

Every day sees more irreparable harm done. People who are pushed out of the workforce stand a good chance of never rejoining it, becoming "discouraged workers" (the economist's term for a worker who can no longer find employment thanks to bosses' prejudice against hiring people who don't already have a job). The businesses those people used to patronize are next in line for the mortuary.

Farms are failing at rates not seen since in generations, even as Trump sends billions to prop up the Argentinian madman Javier Milei, whose Trumpalike policies have wrecked the Argentine economy. Milei repaid the US for its bailout by sending soybeans to China to replace the US crops that China blocked in response to Trump's trade war:

https://www.farmprogress.com/commentary/china-thrives-without-u-s-soybeans

Long-running scientific experiments that might represent the cure for the cancer you'll contract next year, or a way to improve solar output and save you from the wildfires and floods have your town's name on them, or a vaccine for the next pandemic, have had the plug pulled and may never restart. Research groups at universities are falling apart, their grants illegally canceled, the teams scattered to the four winds, never to reform.

Families, illegally deprived of food assistance, are having to choose between rent and groceries. Parents skip medication to feed their kids. Kids go hungry. All of this has permanent effects – on learning, on health, and on growth. Literally: my grandfather, a refugee who suffered from malnutrition in his boyhood, was a head shorter than his Canadian-born children.

Solar and wind projects are being shut down just as they near completion, squandering billions in public money – and a renewable future. Trump has stolen billions intended for Chicago public transit:

https://www.politico.com/news/2025/10/03/trump-targets-chicago-transit-money-shutdown-00592722?utm_source=chatgpt.com

What is to be done? What can be done?

Many Americans have pinned their hopes on federalism, the devolution of power to the states. When I became a US citizen, the hardest question on the exam was untangling the tortured syntax of the 10th Amendment:

Each state retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not by this Confederation expressly delegated to the United States, in Congress assembled.

In a nutshell: the states have total power over their affairs, except where the Constitution says otherwise.

Lawsuits by state attorneys general have thus far done little to stanch the bleeding. Lawsuits are slow, and they rely on judges upholding the law, a task the Supreme Court has abandoned with sadistic glee.

The people need money, not legal briefs.

The editorial collective of Money on the Left offers a way to get money into the peoples' hands, right now, to allow us the material security we need if we are to organize to overthrow fascism and rekindle American Democracy. Their solution is "Blue Bonds," billed as "A Fiscal Strategy for Overcoming Trump 2.0":

https://moneyontheleft.org/2025/05/09/blue-bonds-a-fiscal-strategy-for-overcoming-trump-2-0/

What's a Blue Bond? It's a municipal or state bond, issued to replace the funds that Trump has illegally impounded. Blue states and cities can issue these bonds and use them to fund all the research, subsidies, programs and projects that Trump is trying to murder:

Dollars for housing and rental assistance, infrastructure and construction projects, rural energy and development, public health programs, veterans’ services, K-12 schools, colleges and universities, arts and culture: all public money previously authorized by congressional procedures should be reinstated in compliance with the Constitution.

Blue Bonds wouldn't just be backed by the states and cities that issue them, either. The Fed can swap them, one-for-one, with T-bills, the federal Treasury bonds that are considered "risk-free debt."

Blue Bonds don't have to be bonds, either; states can issue lots of different kinds of debt instruments, like "Tax Anticipation Notes" (TANs) and "Revenue Anticipation Notes" (RANs). These have different maturities and interest rates, and can be combined to hedge against liquidity traps.

These are legal. As the authors write, "Section 13(3) of the Federal Reserve Act permits the Central Bank to purchase debt in any amount 'in unusual and exigent circumstances,' such as during financial crises." Trump destroying the US economy is unquestionably "a crisis." The Fed used Special Purpose Vehicles to bail out the economy during other recent crises, including the 2008 crash and covid. The difference here is that this is a people's bailout, going to fund the programs that people – not bankers or investors – rely on.

This is within the Fed's means. Thanks to those earlier bailouts, the Fed holds $7T worth of assets, and has "repeatedly emphasized [that] it can continue to do so without limit":

https://www.c-span.org/clip/house-committee/user-clip-greenspan-there-is-nothing-to-prevent-the-government-from-creating-as-much-money-as-it-wants/5028493

But – as the authors point out – this isn't just about bridging state and local financing through the Trump years. This is a fundamental restructuring of public spending, a way out of neoliberalism's violent allergy to the fiscal spending that expands the economy and lifts up the population. It's been nearly a century since the New Deal and Americans are still basking in its benefits (where they survive). It is time to renew those benefits:

https://pluralistic.net/2025/10/03/we-dont-care-we-dont-have-to/#were-the-phone-company

Austerity can't get us out of a collapsing economy. It is precisely when the private sector withers that the state must step in, providing the income that people need to do the purchasing that makes the private sector possible. After all, money ultimately comes from the government (try making your US dollars and see how far you get). It's only through government spending (and government authorized lending through banks) that money enters our economy. When governments stop spending, money – the economy's lubricant – dries up, and the economy grinds to a halt.

Public debt issuance isn't "borrowing" in the sense that you or I might borrow. Governments are not households or businesses. Governments aren't money users, they are money creators. Governments don't need to "borrow" to create money any more than Starbucks needs to "borrow" to create gift cards redeemable for future mochalattafrappacheenaspressos.

Private debt is a drag on the debtor. State debt is generative. It creates the roads, the hospitals, the schools, the educated and healthy populace, needed for the private sector.

To issue Blue Bonds, states – which cannot be forced into bankruptcy – must repeal their disastrous "balanced budget" rules and rules requiring supermajorities to raise taxes. From Money on the Left: "public deficits are healthy, so long as they support communities and take care of our planet. What is debt but a promise to bring about a desired outcome in the future?"

Trump has destroyed investor confidence in the US economy. The only paths to returns today are flushing your money into the crypto casino or backing giga-mergers that only go through if the companies involved throw sufficient bribes at the tip jar on the Resolute Desk. Blue Bonds are a safe place for institutional investors seeking a safe haven from kleptocratic chaos.

As the authors say, this is "the true Abundance agenda" – not the "diet Reaganism" of deregulation and sacrifices to the market gods being peddled by the corporate wing of the Democratic Party. A true Abundance agenda "builds robust public systems, including newly chartered public banks, that put people over profits."

Blue Bonds are the good version of Trump's beloved shitcoins. Rather than wildcat money created by and for speculators, Blue Bonds are a source of public prosperity, backed by a present or future Fed under democratic control, accountable to the people. Trump and his fascist pals are all-in on creating as many forms of "money" as there are memes on the internet. Here, at last, is a form of novel money creation that builds a human, shared future.

Hey look at this (permalink)


A shelf of leatherbound history books with a gilt-stamped series title, 'The World's Famous Events.'

Object permanence (permalink)

#20yrsago Ebook DRM that encourages identity theft gets a huge makeover https://web.archive.org/web/20051011041018/https://www.eff.org/deeplinks/archives/004026.php

#15yrsago Security company ad tricks people into thinking their houses were burgled https://copyranter.blogspot.com/2010/10/adt-shows-you-how-easy-it-is-to-break.html

#15yrsago Firefighters watch as house burns to the ground: owner had not paid annual firefighting fees https://web.archive.org/web/20101003021723/https://www.wpsdlocal6.com/news/local/firefighters-watch-as-home-burns-to-the-ground-104052668.html

#15yrsago Sky Marshals to lose their cushy first-class seats? https://web.archive.org/web/20160521034617/https://www.wsj.com/article_email/SB10001424052748703431604575521832473932878-lMyQjAxMTAwMDIwOTEyNDkyWj.html

#15yrsago Michael Swanwick writes a story about autumn on fallen leaves https://www.flickr.com/photos/54366973@N04/5035946705/in/photostream/

#15yrsago Why the copyright wars matter: a reply to Helienne Lindvall https://www.theguardian.com/technology/blog/2010/oct/05/free-online-content-cory-doctorow?utm_source=twitterfeed&utm_medium=twitter

#15yrsago William Gibson nails my philosophy in life https://memex.craphound.com/2010/10/04/william-gibson-nails-my-philosophy-in-life/

#10yrsago Car accidents aren’t accidents https://www.wired.com/2015/10/stop-calling-daughters-death-car-accident/

#5yrsago Why I love the Haunted Mansion https://pluralistic.net/2020/10/04/build-back-better/#grim-grinning-ghosts

#5yrsago Normal isn't enough https://pluralistic.net/2020/10/04/build-back-better/#post-pandemic

Upcoming appearances (permalink)

A photo of me onstage, giving a speech, pounding the podium.


A screenshot of me at my desk, doing a livecast.

Recent appearances (permalink)


A grid of my books with Will Stahle covers..

Latest books (permalink)


A cardboard book box with the Macmillan logo.

Upcoming books (permalink)

  • "Canny Valley": A limited edition collection of the collages I create for Pluralistic, self-published, September 2025

  • "Enshittification: Why Everything Suddenly Got Worse and What to Do About It," Farrar, Straus, Giroux, October 7 2025
    https://us.macmillan.com/books/9780374619329/enshittification/

  • "Unauthorized Bread": a middle-grades graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2026

  • "Enshittification, Why Everything Suddenly Got Worse and What to Do About It" (the graphic novel), Firstsecond, 2026

  • "The Memex Method," Farrar, Straus, Giroux, 2026

  • "The Reverse-Centaur's Guide to AI," a short book about being a better AI critic, Farrar, Straus and Giroux, 2026


Colophon (permalink)

Today's top sources:

Currently writing:

  • "The Reverse Centaur's Guide to AI," a short book for Farrar, Straus and Giroux about being an effective AI critic. FIRST DRAFT COMPLETE AND SUBMITTED.

  • A Little Brother short story about DIY insulin PLANNING

This work – excluding any serialized fiction – is licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.

https://creativecommons.org/licenses/by/4.0/

Quotations and images are not included in this license; they are included either under a limitation or exception to copyright, or on the basis of a separate license. Please exercise caution.

How to get Pluralistic:

Blog (no ads, tracking, or data-collection):

Pluralistic.net

Newsletter (no ads, tracking, or data-collection):

https://pluralistic.net/plura-list

Mastodon (no ads, tracking, or data-collection):

https://mamot.fr/@pluralistic

Medium (no ads, paywalled):

https://doctorow.medium.com/

Twitter (mass-scale, unrestricted, third-party surveillance and advertising):

https://twitter.com/doctorow

Tumblr (mass-scale, unrestricted, third-party surveillance and advertising):

https://mostlysignssomeportents.tumblr.com/tagged/pluralistic

"When life gives you SARS, you make sarsaparilla" -Joey "Accordion Guy" DeVilla

READ CAREFULLY: By reading this, you agree, on behalf of your employer, to release me from all obligations and waivers arising from any and all NON-NEGOTIATED agreements, licenses, terms-of-service, shrinkwrap, clickwrap, browsewrap, confidentiality, non-disclosure, non-compete and acceptable use policies ("BOGUS AGREEMENTS") that I have entered into with your employer, its partners, licensors, agents and assigns, in perpetuity, without prejudice to my ongoing rights and privileges. You further represent that you have the authority to release me from any BOGUS AGREEMENTS on behalf of your employer.

ISSN: 3066-764X

2

Only true of sovereign governments that create money. In the US, only the federal government is a money creator. The states are money users. The state governments are not money creators.

Creating a bond kinda creates money, but not really. The state governments do have to balance their budgets in a short- to medium-term horizon in a way the federal government doesn’t, for these reasons.

3

«What’s a Blue Bond? It’s a municipal or state bond, issued to replace the funds that Trump has illegally impounded. Blue states and cities can issue these bonds and use them to fund all the research, subsidies, programs and projects that Trump is trying to murder»

Municipal bonds have been a thing for over a hundred years and there is a robust market in them so it is hard to imagine why Democratic run local governments cannot issue a lot more of them other their ability to repay them by raising taxes.

«Blue Bonds wouldn’t just be backed by the states and cities that issue them, either. The Fed can swap them, one-for-one, with T-bills, the federal Treasury bonds that are considered “risk-free debt.”»

I was amused while reading the TDS induced hallucination in this blog some weeks ago that the USA had become infested with scamming only during Trump’s presidencies, and I am amused now as I read that another TDS seizure resulted in the fantastic claim that USA local governments should have what is in effect an unlimited never-to-be-repaid overdraft at the Fed instead of raising taxes and spend it on their local vested interest lobbies to buy re-election for Democratic politicians. That is the same fantasy that Yannis Varoufakis had when finance minister of Greece: he wanted an unlimited never-to-be-repaid overdraft at the European Central Bank instead of raising taxes so his government could spend any amount it wanted on their local vested interests groups to buy re-election for SYRIZA politicians.

Frankly I would really like to be able to issue “Blissex bonds” in any amount I wished and have them always swapped by the Fed with USA-guaranteed bonds, or to have an unlimited never-to-be-repaid overdraft at the European Central Bank for myself.

If USA Democratic Party run local governments want in their autonomy from the federal government to spend more or in different ways from the federal government they can raise taxes and spend them, they have fully sovereign taxing powers.

Perhaps in a moment of lucidity between TDS seizures our blogger can reflect on a simple question: why of the many USA states that have been run by the Democratic Party for decades none of them has “Medicare for all” or decent social insurance or good public housing programs even if they can and do issue large amounts of municipal bonds?

«Blue Bonds don’t have to be bonds, either; states can issue lots of different kinds of debt instruments, like “Tax Anticipation Notes” (TANs) and “Revenue Anticipation Notes” (RANs).»

That is another one of the fantastic ideas that happened after the end of the giant greek government debt fraud in 2008: simply rename bonds (debt backed the tax or another revenues) as TANs or RANs to pretend that debt is not debt. Quite amusing.

4

«The state governments are not money creators. Creating a bond kinda creates money, but not really.»

The critical part of the “Blue Bond” fantasy is “The Fed can swap them, one-for-one, with T-bills” so in effect the Blue States would delegate the money creation to the Fed to which the USA government has delegated their sovereign (banknote) currency issuing powers.

«The state governments do have to balance their budgets in a short- to medium-term horizon»

If the Fed does the swap then both the Democratic and Republican Party local mafias (most USA local government is owned by mafia-style local cliques) never need to balance their budgets again as they can roll-over forever their “Blue Bonds” at the Fed so in effect they get indirect money-issuing powers just as the greek governments of the 2000s thought they could roll-over forever their eurobonds.

5

“Blue states and cities can issue these bonds and use them to fund all the research, subsidies, programs and projects”

«The state governments do have to balance their budgets in a short- to medium-term horizon in a way the federal government doesn’t»

My previous reply left unsaid what is the real purpose of the “Blue Bonds” proposal:

  • The “Blue states and cities” could “fund all the research, subsidies, programs and projects” in their areas while balancing revenues and spending by raising taxes in their area. Blue states and cities have not done anything like medicare-for-all, decent social insurance and pensions, good public housing, etc. in their areas even if they have been in control for decades.
  • That is because the Democratic Party represents mostly the interests of affluent and rich middle-class and upper-class taxpayers, not those of those who would benefit from medicare-for-all, etc.
  • Having an unlimited ability to roll over Blue Bonds swapping them with federal bonds would mean not only being able to fund tax cuts for their affluent and rich voters in their areas, but also to inflate the national money supply with rising issuance of federal bonds.
  • The rising issuance of federal bonds to fund rising tax cuts and spending by Democratic Party states and cities would result in the Federal Reserve raising interest rates nationally and this would damage the popularity of the Trump administration.

The last point is the one that matters most: “get Trump”.

6

This is you straw-manning. I’m surprised you don’t acknowledge that the USA is infested to a much greater degree with scamming during Trump’s presidencies, as he himself is a huge grifter. He inherited around $400M and avoided paying taxes on it then by breaking the law. Statute of limitations is up on that. He sold American reputation out to foreign dictators and war criminals by allowing his Trump-branded properties to be traded with bearer certificates. He’s now running Trumpcoin, the Trump penny stock, and (more his sons) the Trump crypto platform. He ran Trump University, Trump Steaks, stiffed contractors what they were owed for decades, etc. I’m constantly surprised how CHEAP he sells out criminal pardons for grifters.

Nobody, not Doctorow, not I, is claiming there’s no scamming when Trump wasn’t president. We’re claiming the scamming is a lot more rampant and intense and frequent under Trump than other times in recent memory.

7

This is totally correct.

It might be delusion by Doctorow. OR, perhaps, it’s an idea that, if the Fed isn’t yet captured, it can sidestep the MAGA dictatorship and allow some solace to people who do good work, by letting them get paid to do all sorts of good, worthwhile things.

I don’t know whether “most” USA local government is mafia, but Trump is plainly mafia-style don. A leader of a CONVICTED felonious criminal enterprise. Constantly trying to operate like a mafioso. I’m more concerned about my federal government being captured by a 34-time convicted felon, adjudicated rapist, who openly lusts for dictatorial control, than my local government. Aren’t you?

8

«if the Fed isn’t yet captured, it can sidestep the MAGA dictatorship and allow some solace to people who do good work, by letting them get paid to do all sorts of good, worthwhile things»

As I keep saying any Democratic Party local government that wants the votes of “people who do good work, by letting them get paid to do all sorts of good, worthwhile things” can simply raise taxes. With higher taxes they can fund a local New Deal, and build housing, provide better social insurance, pay for medicare-for-all. Why haven’t they done that despite having been in control for several decades in California and other states?

9

I disagree. Only with fiat can such scale of programs be funded. “Better” social insurance can obviously be funded with taxes, but only to a degree. Some housing can be (and is) built, but not “enough”.

Medicare-for-all was, to a degree, implemented on state taxes in Massachusetts, under Romneycare. The big (net) benefit comes from doing actual Medicare-for-all, or something like it, at a national scale. It will (net) save money vs the status quo. It will cost a lot. It will benefit even more. I doubt states can afford it up-front, for all. Perhaps a state could spin it up by expanding coverage chunk by chunk of the population, and bootstrap to eventually covering all. If a state of California’s size did this, they’d capture most of the benefits of negotiating prices from a position of strength. If a small state did it, they’d capture basically none of the benefits, because they have a position of weakness when negotiating, and Stryker and Purdue and Johnson & Johnson are gonna laugh them out of the negotiations, and keep gouging their citizens.

I agree that many/most federal-level Dems are corporate whores, not agents working for the common good. But many are working for the common good to a degree, and some, like Bernie Sanders, have high integrity, and truly represent the popular interest.

10

«Only with fiat can such scale of programs be funded.»

  • “fiat” on a large scale in the USA is politically viable only for Wall Street bailout and funding wars; this is a completely bipartisan position that will not change without some very strong fight.
  • “fiat” on a small scale can be used and indeed it is necessary (if the economy expands) but cannot fund large scale programs without a disruptive effect on inflation. The transparent main aim of the proponents of “fiat” funded “Blue Bonds” is not “we can have nice things” but to fuck over the economy to “get Trump”, regardless of the cost on the “little people”.

«Medicare-for-all was, to a degree, implemented on state taxes in Massachusetts, under Romneycare.»

That was a way for Republican administration to both subsidize employers and to reduce the power of the labor unions, and indeed Obamacare is a copy that has the same aims. Something much more like Medicare-for-all was done by Vermont in 2011 for some years, and then repealed: Vermont health care reform - Wikipedia

«If a state of California’s size did this, they’d capture most of the benefits of negotiating prices from a position of strength.»

Indeed why ever did California’s Democratic government did not do it, and why Vermont repealed it? There are two obvious reasons:

  • In the past the Democratic Party was in large part the party of the labor unions, and medical insurance was an employment benefit for union members, and the labor unions were strongly opposed to having their members taxed to provide medical insurance for the under class.
  • Since Clinton the Democratic Party is largely the party of affluent upper-middle class property rentiers and they do not want to be taxed to pay for medical insurance for the working class, in particular because the working class is by now probably around 50% immigrant.

«I agree that many/most federal-level Dems are corporate whores»

Even many/most of the local ones are. :frowning: Even when they are not so many Democratic Party and labor union officials and academics, journalists, etc. usually are affluent upper-middle class people and follow their class interests.

The biggest problem of the social-democratic left in the USA/UK/… is to persuade upper-middle class people what have chosen “centrism” (reaganism+gay marriage etc.) that good wages, decent pensions, low housing costs for all are better and more secure for them too than making big profits (redistributed from the lower classes) with property and stocks.

11

I already answered this. California is a state. States don’t have fiat. (Some) nations do. Like I said, but you ignored, it might be possible for a state, which hasn’t fiat, to implement a Medicare for all, step by step, incrementally. It might not. It’s certainly not possible for states to implement wholesale because they lack fiat. They have to balance spending against income.

Your first part makes no sense. Fiat is very obviously very useful for doing things at scale. Lack of fiat prevents doing expensive things at scale, because, for the most part, and certainly over the long run, governments that lack fiat must balance income with expenses. Fiat governments don’t have to. Post offices, interstates, social security, Medicare, (half of) Medicaid, all make sense to do at scale, with federal fiat. None of these have been meaningfully implemented by governments lacking fiat.

Trump is already massively deficit spending (again, did it first term, too). Deficit spending for things that benefit regular people is good. Deficit spending for things that benefit small numbers of very rich people is bad. Morally, and for the economy. If we undertook such programs, the economy would flourish, not flounder, so Trump would be made to look good, not bad.

12

«it might be possible for a state, which hasn’t fiat, to implement a Medicare for all, step by step, incrementally. It might not.»

Why has no Democratic run state except Vermont ever tried? Never even started trying, over many decades. Are all state-based Democratic government so terrified of what Proposition 13 means? Because perhaps I am misinterpreting you but to me your argument seems to be “Proposition 13” or equivalently “we will not raise taxation on our core affluent upper-middle class voters who already have medical insurance just to pay for nice things for lower class people”. Even if the Democratic Party was one the “tax and spend” party but it seems to have become the “borrow and spend” party like the Republican Party.

Anyhow as I keep repeating local government already do issue large amounts of “muni” bonds so I really cannot see what the fuss about “Blue Bonds” is other than effectively asking the federal government to monetize them with inflation or to raise federal taxes to repay them (the “get Trump” angle).

«It’s certainly not possible for states to implement wholesale because they lack fiat […] None of these have been meaningfully implemented by governments lacking fiat.»

That is a claim based solely on your authority: plenty of nations have realized medicare-for-all and balanced or nearly balanced income with expenditure. For example Germany (however that is not quite a single payer system but still is “for all”). France has a single payer system and raises 44% of GDP as taxes, and that seems to work. Why cannot California’s Democratic Party do the same? Proposition 13?

«They have to balance spending against income.»

In the longer term even currency issuers have to do that, as bonds need to be repaid if they want to avoid to monetize them and inflate prices.

13

because they don’t have fiat. It may be impossible. I’ve stated that it might be possible, step by step, or it might be impossible. I don’t know.

Are all state-based Democratic government so terrified of what Proposition 13 means?

I don’t know what Proposition 13 “means”.

perhaps I am misinterpreting you but to me your argument seems to be “Proposition 13” or equivalently “we will not raise taxation on our core affluent upper-middle class voters who already have medical insurance just to pay for nice things for lower class people”.

My argument has nothing to do with that. It’s that single payor saves money, and is the best existing medical care payment system I know of in the world to date. Single payor is very expensive. It still saves money vs every known alternative, and gets equally good outcomes as all the best alternatives. Single payor only works at scale. Single payor may only be possible with fiat. Single payor may be possible without fiat, if implemented step by step, but I don’t know.

That is a claim based solely on your authority: plenty of nations have realized medicare-for-all and balanced or nearly balanced income with expenditure.

No, it is not an argument from authority.

For example Germany

Germany is nearly 100% sovereign today, and was 100% sovereign at the time of their program’s creation. Not a counterexample to my assertion.

France

France is nearly 100% sovereign today (though I would estimate less sovereign than Germany), and was 100% sovereign at the time of their program’s creation. Not a counterexample to my assertion.

Why cannot California’s Democratic Party do the same?

Because it’s expensive, and California isn’t sovereign. It has nothing to do with any party, much less the Democratic Party of California. It has to do with the practicalities of instantiating a huge, expensive program, all at once, from 0 to 1.

In the longer term even currency issuers have to do that, as bonds need to be repaid if they want to avoid to monetize them and inflate prices.

Incorrect. For example, the USFG “targets” 2% inflation annually (really 4%). The USFG has consistently outspent its income over time, and I expect it will continue to do so. This is fine, good, normal for a sovereign government. AFAIK, all sovereign governments do this pretty consistently over time.

If you look at how money is created, it first has to be “spent” (or otherwise introduced into circulation) before it can be collected as taxes. Early instances were governments that’d introduce a king’s coin into a kingdom, mostly through paying soldiers in coin, require a tax at the end of a time period (often 1 year) of private citizens, and by that mechanism force private citizens to serve the king’s army in free market ways – housing, shoeing, clothing, arming, and feeding the king’s soldiers.

If the USFG didn’t spend money into existence, the whole cycle wouldn’t be kicked off. Yes, it has to collect dollars as taxes to keep the value of dollars high, but it also has to spend more than it collects, or there would be no reason to use USD.

Inflating prices isn’t something sovereign governments avoid. The evidence is abundantly clear that sovereign governments overwhelmingly are fine with inflating their moneys.

1 Like
14

Blissex and TTS, thank you for this in-depth and civil debate! I’ve been following it the whole time and you’ve both given me much food for thought on the subject.

15

This topic was automatically closed after 15 days. New replies are no longer allowed.