this post was submitted on 12 Mar 2025
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Money is just a way to make somebody pay. The problem you describe only happens, when a government is bad in using its money. That leads to high debt. If the country controls the currency it borrows in, then a solution is to print a lot of money to pay back the debt. However that comes with inflation, which usually means poor people have to pay for it. Alternativly the country might not pay at all, which would mainly hurt the rich.
One really important other part of that is that private capital is not able to force austerity. If they have it in your country, the government can just tax them.
Disagree on some of the points but I'll only address the need for money printing and forced austerity since those are the only ones I can relatively concisely. I agree on the assessment on who gets hurt by inflation and default.
I'm not sure if you're saying that governments only need to print more money if they're bad with it but I'll address some needs for money printing just in case.
There are plenty of reasons for governments to print money. For example, population growth. Having growing population and the economic expansion that comes with it, without monetary expansion leads to price instability where prices have to fall in order for the same amount of money to be able to buy more clothes and bread made and consumed by the new people. Price instability is a problem (e.g. deflationary spiral) which is why the government prints money and releases it into the economy to compensate for the increased number of people and goods to keep the prices stable. Critically, the government cannot borrow or tax this money from its citizens because that will remove it from the very economy the government is trying to add money in. End herein lies the clue the government cannot borrow or tax money it hasn't printed and spent first. Printing and spending has to appear first or a government has nothing to tax or borrow. This is why a government does not need to borrow or tax in order to spend. A government might choose to borrow or tax for different reasons after printing and spending. E.g. it could tax in order to keep inflation in check. I'm not saying all governments understand that and I'm definitely implying that the ones that use the family budget analogy don't understand how the system works.
This is only true under the additional assumption that the government in question is not ideologically or financially subservient to private capital. If it is, as many are, it will choose not to tax, in which case it would be forced to cut spending and/or sell off assets, which is austerity. This process has driven austerity and privatization in many places around the world. It's driven it where I live as well. In Canada, we've sold railways, utilities and highways, among others.
The problem with printing money to keep deflation in check is only a problem, if the central bank does not care about it. So in the case of Sweden joing the Euro, the ECB absolutly print of destroy money to keep inflation in check. If anything the larger region the currency is used in is going to create more stability.
If a government wants to sell assets to its friends, then it can do so. No need for an economic crisis, austerity or the like. Since you mentioned Canada, Canadian National Railway was privatized in 1995, the years before that the economy grew somewhat well.
You're twice addressing whether something is a problem by saying it's only a problem if someone fucks up. Meanwhile I'm not discussing that because it's not interesting. Yes problems can occur when people do the wrong thing. And people can and will do the wrong thing. They'll also do the right thing. I'm discussing the availability of a tool under domestic disposal and what its implications are.
Similarly, I'm not discussing the obvious case of a government's ability of selling to its friends, it's not interesting. I'm discussing the case where the public and its government don't want to do that but are ideologically committed to balancing budgets without creating new money. Canada was in recession in the early 1980s and the early 1990s. Irrespective of that, the Canadian governments that spanned the 1983-2003 period ran on balancing the budget and austerity+privatization to achieve it and they were not considered friends-selling governments. You can read about the economic policies at the time.
What I am saying is that if the economy grows and the it requires more money, then adopting the euro there are two options. Either money flows in from other countries or the European Central Bank raises interest rates. Unlike just adopting another countries currency like say Ecuador the USD, joing the Eurozone wourld mean that Sweden gets a seat on the Gouverning Council of the ECB, which gives them a vote on raising interest rates or other central bank policies.
As for the second point. Between 1983 and 2003 Canadas economy shrank for only a single year. Debt to GDP was at its highest in 1997, so they most certainly did not give a crap about balancing the budget or anything like it. They wanted to sell public assets and needed an excuse to do so. Thats all that is an excuse.