The government cannot “simply print money”. In order to add new currency, the government sells bonds to the reserve banks. Future debt is exchanged for money to spend now. If the banks do not loan money to the government by buying the bonds, new money cannot be printed.
The accumulated bond debt is the national debt.
Tax income is used to make payments on the national debt (to pay off bonds which have reached their maturity period). You can also participate in this system by purchasing government bonds, it is not exclusive to banks.
If the government fails to make payment on the bond debt, then the government’s credibility drops and banks may choose not to buy new bonds, which immediately devalues the currency.
Functionally, the value of currency is based on faith that the government issuing the currency is solvent and will be able to make payments on its bonds in the future. Tax income is necessary to ensure that the government is solvent.
None of that has anything to do with Trump’s asinine tariffs, of course.
I’m pretty confident that selling bonds is not the only mechanism by which the government has access to money. Selling bonds is a common way for cities and states to raise funds, but I’m pretty sure the federal government can just … fund stuff.
Bonds are the mechanism by which the government issues new money. They cannot “print money” without selling the equivalent value in bonds.
I knew that’s what you meant but I don’t think that’s true. They choose not to because there’s concerns about inflation and devaluing the dollar, but there’s no constitutional restriction on that. The necessary and proper clause is pretty broad, as is Article I, Section 8, Clause 1.
The government cannot “simply print money”. In order to add new currency, the government sells bonds to the reserve banks. Future debt is exchanged for money to spend now. If the banks do not loan money to the government by buying the bonds, new money cannot be printed.
The accumulated bond debt is the national debt.
Tax income is used to make payments on the national debt (to pay off bonds which have reached their maturity period). You can also participate in this system by purchasing government bonds, it is not exclusive to banks.
If the government fails to make payment on the bond debt, then the government’s credibility drops and banks may choose not to buy new bonds, which immediately devalues the currency.
Functionally, the value of currency is based on faith that the government issuing the currency is solvent and will be able to make payments on its bonds in the future. Tax income is necessary to ensure that the government is solvent.
None of that has anything to do with Trump’s asinine tariffs, of course.
I’m pretty confident that selling bonds is not the only mechanism by which the government has access to money. Selling bonds is a common way for cities and states to raise funds, but I’m pretty sure the federal government can just … fund stuff.
No, of course the government has other sources of revenue. That’s not what I said.
Bonds are the mechanism by which the government issues new money. They cannot “print money” without selling the equivalent value in bonds.
I knew that’s what you meant but I don’t think that’s true. They choose not to because there’s concerns about inflation and devaluing the dollar, but there’s no constitutional restriction on that. The necessary and proper clause is pretty broad, as is Article I, Section 8, Clause 1.
I’m not a lawyer though