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
The government prints it’s own money and charges future governments interest on the loan. So-
Q1. Taking money from the **future** governments pocket and putting it into their own.
Q2. You can’t really default at all. They can always print off more tomorrow.
Q3. The government doesn’t really collect the interest. The **future** government collects the interest on the loan the government took out, when the Bond matures.
That’s a gross simplification, but as you can see, ultimately, it’s all BS. It’s todays government printing money because it wants to spend it. Like when they want a war they print it off. When the people need healthcare or education, “But how you going to pay for it?”
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