monetize the debt

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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 ?
Third, when the Fed monetizes the debt and inflation kicks in, our purchasing power will dissolve, with all the havoc that creates for individuals and society.
But, unless it "monetizes the debt," it owns just a relatively small percentage of the Federal Government debt.