Don't add government debt to your list of things to worry about | Jess_Irvine
It's only natural to wonder, amid mind-bogglingly large amounts of government spending to fight against a coronavirus-induced recession: how will it all be funded?
Such fear is unnecessary, but the answer to the question of how we are going to fund all this spending is orders of magnitude more complicated than in the past. But that’s not to say the Reserve has no role to play. Indeed, having exhausted its traditional method of stimulating the economy, the Reserve has been stepping up to the plate with more exotic methods to boost the economy, including by buying government bonds.
To whom, in such a situation, do taxpayers ultimately owe the money? Themselves? The answer is: well, yes . The former camp call themselves "modern monetary theorists" and argue any country with its own currency can always simply expand its money supply to do anything it wants to boost the welfare of its people.
As things stand, the way we are funding the response to this crisis, with the government borrowing money from the private sector and only having the central bank step in to buy bonds in the secondary market, can be expected to keep some discipline on government spending.
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