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Ask HN: Where Does the Money Come From?

2 points by gjabbar ↗ HN
Between the government and the fed were looking at +US$2T in stimulus and asset buying. That’s just here in the US. Where does all this money come from? Does anyone have a real and simple answer as to where this money comes from and how we fund it?

Thank you!

- A concerned millennial

4 comments

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austincheney
It doesn't. The government is spending money it doesn't have. This is common practice that occurs regularly, but never in principle so large.

The US government spends far more than it generates in revenue, which is called a deficit. The deficit is typically financed as debt and that debt becomes a financial instrument capable of restructuring, private ownership, and refinancing as secondary debt (debt on an existing debt).

* https://en.wikipedia.org/wiki/Government_budget_balance

* https://en.wikipedia.org/wiki/Government_debt

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[dead] codevark
Understand: There is no shortage of money in the world.

It's just distributed very oddly.

Maybe this will even things out a bit. Much like certain presidential candidate's plans for fixing the mess we were in before we got into this current mess.

Eridrus
To be a little flippant about this... "money printer go brrr" (as the meme goes).

We can fund it through debt that we have to pay back (eg, issuing government bonds), but we can also literally print money.

Printing money can have inflationary effects because money is worth just a tiny bit less when there is more of it. But in a downturn this is generally a less important concern. There's no really simple answer for when printing money is fine and at what levels and when it is not, particularly since it is not a settled topic. The recent consensus generally seems to be that printing money in recessions is good though.