I mean, a government can always create its own fiat currency without borrowing it. The conventional mechanism is to issue bonds and have the central bank create new currency to buy them off the treasury. There is "debt" on paper only.

wouldn't that look bad?

is it a buck-stopping-elsewhere thing?

why go the bother making two stages out of one deal, ass-covering, deniability issues?

whom, exactly do they think they're fooling?

if enough of the public understood, would they be able to call it honest?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

Which is why a "fiscal stimulus" package funded by selling bonds domestically is taking money away with one hand to return it with the other.

But presumably money that is available to be put into bonds is of low stimulus multiplier value, whereas direct public spending on - say - railways (to pick a totally random example) has a high multiplier effect.

Besides, if the central bank is maintaining a bond rate target, then the bonds that the state sells will just be bought back by the central bank. Selling bonds depresses prices, which drives up interest rates. Central banks, wanting to lower interest rates during a recession, will buy up bonds (which raises the price of bonds, i.e. lowers the interest rate). (Assuming perfect, efficient markets, perfect, symmetrical information, yadda, yadda.)

- Jake

Friends come and go. Enemies accumulate.