Does the Government have unlimited money?



This is a real question because people complain about our debt but the government spends a lot of money.

In: Economics

Yes and no. Essentially they have the ability to create unlimited money (Yes), but on the other hand doing that would be economic catastrophe (No).

So they take in taxes, and what they can’t cover they sell bonds to make up the rest.

People are concerned with the debt because it’s not something we can maintain long-term, as it stands we spend $300 billion or so each year paying the interest. That’s approaching 10% of our annual budget just to service outstanding debts, that’s $300 billion worth of any number of things we could use like fixed roads or better education systems or whatever that we now can’t have. And every year we borrow more and more.

In the sense that you’re probably asking: No.

Any given department or organization or “subdivision” of the US Government has a fixed -budget- that they have to live within. Example: Congress has been cutting the budget of the IRS for years now, so they are **17,000** agents below their peak. They’re behind on processing 2019 returns, they’re behind on 2020 returns, and they have the smallest enforcement staff they’ve had in a long time.

Why don’t they just hire more people? NO BUDGET. Congress won’t give them the money.

Same thing applies to -almost- everything. Department of Defense, Postal Service, you name it, they can’t spend money they haven’t been given.

That’s not “unlimited money”.

That depends on what exactly you mean by money. In theory, government can print unlimited numbers on its money. In 1946, Hungary printed 100 quintillion (100,000,000,000,000,000,000) Pengo notes.

The problem is: if there is too much money in circulation, people will demand more of it in exchange for stuff. Stuff includes other currencies. Using the Hungarian example, by 10 July 1946, the 100 quintillion Pengo note was worth about 0.0000000002 US dollars, significantly less than similar area of toilet paper.

How much does your spouse love you? Let’s say they love you a million. Fair enough. But what if a second later they say they love you a billion. Then a trillion. Their love hadn’t increased, rather it’s the same love just being demarcated differently.

That’s basically how money works.