nations that can issue their own currency would rather default on the CURRENCY itself, meaning the money supply gets expanded so the pre-existing debts can be paid off.
Inflation, using the most common description, is not possible with a free floating fiat currency. This is not to say that prices can't rise in times, or specific instances, when resources become scarce or supply chains are interrupted. It simply means that the money supply is not related to those price increases.
Creating less money will not cause the price of commodities to go down and not all prices rise in unison as the money supply is expanded, meaning that money/demand is not the driver of the current inflation. Not supplying enough money so the people can buy the more expensive necessities is a sure path to massive demonstrations and discord, if not outright revolution.
Like stated by the IMF, negative or below market real interest rates help to lower their nominal debt-to-GDP levels.
The IMF never loans money in the currency the borrowing nation can create. It almost always loans US dollars. A struggling economy that cannot produce the currency needed to make payments is not going to gain anything by borrowing from it. It is nothing but a tool of American imperialism.
Basically a tax on bondholders and savers, like we have seen in the past
Bonds are simply a promise to pay contracts that pay a small return for giving up liquidity. They are not a "funding mechanism" for the issuer of a free floating fiat currency (ditto with taxation, but that's a different rabbit hole).
As the monopoly issuer of US dollars the federal government must first "create" dollars by spending them into existence before they are available to be loaned or collected as taxes. Federal spending "funds" both, not the other way around. Any interest paid on bond issues is a "gift" to investors/savors.
too much manipulation in the price of money also causes massive malinvestments among other problems.
I'm almost in agreement with you on this, but for different reasons. There is no reason for bonds to ever pay interest except as a tool the Fed thinks it needs to set overnight interest rates since it cannot buy/sell in the primary market.
Given that it shares a balance sheet with Treasury, making it the gorilla in the room at any auction, it should have no problem with setting any rate it chooses. I would choose zero and stay out of the way of the economy. Having a government entity that believes that "any" level of involuntary unemployment is a "tool" it can use at will is disconcerting.
you ignored my last part all together it seems.
I almost didn't even leave a comment. When people don't understand the basics of money they usually can't add anything of interest. Don't get me wrong, as your view of finance at the federal level is quite common. It's just wrong by 180 degrees and that makes anything beyond that irrelevant.
This errant view by the majority is largely what is wrong with our economy. It serves the politicians and their puppet masters very well, so it is unlikely to change any time soon.
Crypto doesn't need hawking lol, the easy money policy will do that itself until it stops.
More power to you. It just isn't money, and never will be, at least in the US. Blockchain, however, has great potential in other areas. Have fun with that.
