I'm curious about funny money economics, which has a long history in our region -- Social Credit in NZ, and of course Bill Mitchell's MMT. Relevant atm with governments around the world 'borrowing' trillions, which 'has to be paid back'; comes with this 'huge interest bill'.

Technically those contentions are obviously wrong for a currency-issuing sovereign state: it does not need to borrow to fund relief / stimulus, does not need to pay anything back, and does not need to pay interest. It controls its own currency and can make more any time it likes.

'But Zimbabwe!' Yes yes, that is the game. But bear with me here. First accept that *technically* it is not necessary to borrow. Rather, states near-universally choose to borrow their untaxed spend, or choose to pretend to (we're getting to that).

Yet mainstream economics responds with utter derision; refuses to engage. That tells something I think. Either these ideas really are completely stupid (but remember, they are technically correct), or else economics deeply fears them -- intellectually, commercially or both.

It is right to fear them -- Zimbabwe, Argentina, Weimar. Issue too much currency and you provoke inflation via the monetary mechanism (too much money chasing too few goods). Except what is 'too much'? That seems to be Mitchell's main thesis -- the shape of that relationship.

Don't know details, but can observe one thing -- governments around the world have been doing funny money for a decade now via a game called 'quantitative easing'. We started it last month. And they have failed to provoke inflation, or currency collapse. The opposite happened.

Something is deeply flawed with the mainstream theory. What's more, the mainstream must know that, because it appears to be running an elaborate ruse to hide the fact that it knows.

Quantitative easing amounts to funny-money currency issuance to fund government spending; it's just that the fact is not explicitly stated. It's explicitly obfuscated. The financial media will chuckle and call it money printing, but routinely detached from who spent what where.

Treasury sells bonds -- borrows money, from the economy -- to fund its deficit. Then another arm of government, the Reserve Bank, buys and holds those bonds (not directly, that would be unseemly -- in the secondary market). Effectively the government just borrowed from itself.

It pays interest to the Reserve Bank, which thereby makes a profit, and remits that to Treasury as a dividend. Which is a circular ruse. No net interest cost accrues. There is no interest.

And when the bond matures (loan term expires and repayment falls due)? We just go again.

As said, we're new to this so the effect here is tiny at the moment. But in the US a vast slab of 'US treasuries' (government bonds) are now held in its federal reserve system (which is a weird quasi-non-government collective, so pretend-different ... but not really).

Yes that says $4T. Effectively the US government is funding itself with Bill Mitchell funny money. It surely knows it, and is likely running MMT or something very like it to judge where the inflationary limits might lie. So far it hasn't found them.

https://fred.stlouisfed.org/series/TREAST