The Bank Of Japan owns around 45% of all Japanese debt issued as government bonds. The Bank of Japan gets its funds solely from the government – it’s not a commercial bank that gets its money from clients to invest in bonds. Therefore, the government basically owns it own debt. Isn’t that just the government taking money from one of its pockets to put it in the other pocket? How could you default on a debt to yourself? Why go through the charade of buying government bonds in the first place to only have to pay interest on which, of course, you can collect the interest? I know they are independent entities but the money still has the same root even if the decision making bodies have some independence.
In: Economics
> Isn’t that just the government taking money from one of its pockets to put it in the other pocket?
It’s exactly that and it’s an accounting trick. The government put rules on how it could transfer money so when it wants to cheat it has to work around the rules it created.
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