I did not vote for a "Grand Bargain"

[cthulu2016]

99. I don't want to be disagreeable, but this is wrong

"Treasury bonds are the only mechanism that exists to create new money, period."

That is false. Most money is created from private bank loans, not bonds.

You draw a distinction between a collateralized loan and an uncollaterized loan as if that was key to the definition of borrowing. It isn't. Substitute unsecured debt if it helps. It makes no difference it terms of whether it is "borrowing."

I think you are probably getting at the fact that the government creates the money with which the bond is to be repaid. That is interesting, but it completely misses the point that borrowing is a process of borrowing, not a process of repayment.

An American bond mutual fund decides to purchase some bonds at auction. (For simplicity, focusing on direct bond sale from the government, rather than secondary market trading.) That mutual fund takes US dollars that investors have placed in the fund and gives it to the government in exchange for the repayment plus interest in the form of US dollars.

The money the mutual fund pays the government for the bond is not created. It already existed. It is real money being borrowed.

Now the government has agreed to repay that loan according to a set of terms. Interest rate and schedule of repayment.

If I sold the same bond I would not have the option of printing money to repay it. But I would also not have the option of levying a tax on the people to repay it.

The fact that the bond will probably be repaid partially in US dollars that didn't exist at the time of the bond issuance has no bearing on whether it is borrowing.

The identity of the borrower does not mean it is not borrowing.

You are getting hung up on a genuinely meaningless distinction. The government has a set of options in how to pay for the loan obligation. It can get money from taxes or duties, or sell property or create more money.

It creates that money by selling a NEW bond to a holder of existing money in exchange for some of that existing money with which to repay the first bond.

It is all real money being borrowed and all real money being repaid.

Is this some distinction you are drawing some MMT stuff?