Though in my opinion a government has to be very incompetent to do such a thing. In economic discussion, you may often hear that a government is “printing money” and then picture sheets of hundred dollar bills coming off a printing press. The government budget deficit was $984.4 billion in fiscal 2019. In reality, this is not what actually happens in every sense of the term. The obvious reason why government wouldn't massively print money is not only because of inflation, but currency value. Why can't the government just print more money to get out of debt? Let’s suppose the United States decides to increase the money supply by mailing every man, woman, and child an envelope full of money. Given that there will, in fact, be a tomorrow, it is a good time to take a closer look at both the theories and the realities of monetary growth and inflation. To see why, we’ll suppose this isn’t true, and that prices will not increase much when we drastically increase the money supply. But, if the economy was close to full capacity, printing money to ‘monetize the debt’ would lead to inflation. First of all, the federal government doesn't create money; that's one of the jobs of the Federal Reserve, the nation's central bank. | Comments: 0. What would people do with that money? With the government borrowing heavily to fund its pandemic response and recovery, it has been suggested it could simply cancel its debt by printing more money… In the case of Zimbabwe, high government debt and printing money led to a severe case of hyperinflation. They do this every day in order to manipulate the money supply in the economy in an attempt to steer inflation to within a target range. 4 Reasons Why Borrowing Money Is Usually Better Than Giving Up Equity Next Article . It depends on the state of the economy. “The United States can pay any debt it has because we can always print money to do that,” former Federal Reserve chairman Alan Greenspan … The U.S. treasury said they expect to borrow up to $4.5 trillion this year. Printing money, or money creation, most often involves creating money that is not physical. The Fed tries to influence the supply of money in the economy to promote noninflationary growth. Consider the case of the United States. A risk any government faces from simply “printing money” is, of course, inflation. Central banks can literally create or destroy money. Evaluation of government borrowing. Part of this is deficit spending but the majority is for fiscal support and emergency spending measures to help with the pandemic. However, this could be mitigated by a government, reducing the CBDC units available or limiting their use. 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