• omega_x3@lemmy.world
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    5 months ago

    If the government just prints a bunch of money to pay off their debit then each dollar is worth less than before. Plenty of countries have done it and almost always results in hyperinflation. The simple way to understand this is say, everyone has a dollar so very few things will cost more than a dollar, but if you started handing everyone $100 bills then people will see the value of a single dollar as being lower and start charging more for their goods and services. There are other things that go into hyperinflation but this is the explain like I’m 5 answer.

    Now the government is basically paying its bills with a credit card and businesses and other countries own the debt betting that the US will keep paying towards its debt plus interest. If the government stops paying then fewer countries and businesses will be willing to offer credit. And once you run out credit then you have to start printing more money instead of adding more debt.

    • ryannathans@aussie.zone
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      5 months ago

      Debt causes inflation, low interest rates are how we got into this inflationary situation.

      Debt is literally printing money but you owe someone. The government could print and destroy money as required without owing some random banker.

      Since covid there has been zero fractional reserve required for lenders. Literally printing money would be better for everyone.