Absent the opportunity to earn that money in the first place, the money people save in bonds would not have existed at all! This is not a matter of people merely deciding where to put their money, but even having any money to save in the first place.

This needs clarification. If you are saying that “Treasury” bonds are the “source” of public spending in any way I have to disagree. Public “deficit” spending by the monopoly issuer of the currency is the source of excess reserves in the banking system that are required to purchase bonds. Without deficits above tax collections, there can be no bond issues.

Our monetary system could chug along quite well without issuing Treasury debt because of this proper view of how money is created and flows. Bonds are simply an asset swap for cash reserves that pay a bit of interest, but they don’t create a dime of revenue for the federal government. Many economists are advocating for setting a zero interest rate policy permanently by eliminating bond sales at the federal level entirely. Others suggest that we replace bonds with interest payments on excess reserves in the system that would preserve the Fed’s ability to manipulate rates.