monetize the debt

Monetize the debt

Financing the national debt by printing new money, which causes inflation due to a larger money supply.

Monetize the Debt

In government, to print money in order to repay the national debt. For example, suppose a government is $1 trillion in debt. Theoretically, the government can simply expand the money supply by $1 trillion and reduce the national debt to zero. It is not uncommon for governments monetize their debts, but because it increases the amount of money in circulation, it is considered highly inflationary.

monetize the debt

To convert government debt from interest-bearing securities into money. Although both the securities and the money are considered government debt, the latter can be used to purchase goods and services. Thus, monetizing the debt is considered an inflationary process and, although it may temporarily depress interest rates, it is likely to result in higher interest rates and lower bond prices in the long run.
References in periodicals archive ?
Bernanke's lie on '60 Minutes' that the Federal Reserve isn't printing money is similar to the lie he made under oath on June 3rd, 2009, when he testified in front of Congress saying, "The Federal Reserve will not monetize the debt.
One danger would be increasing political pressure on the central bank to monetize the debt by keeping interest rates artificially low.