Can Monetization Really Reduce Government Indebtedness?

Can Monetization Really Reduce Government Indebtedness?

The question is not straightforward as it sounds.Monetization generally speaking would not change the overall stock of public sector debt. While this is true, it ignores the more bigger picture: when a central bank purchases a government debt with newly printed money the real overall stock of public sector debt would reduce.

Discuss: 1.Why do central banks monetize debt?

2. What the advantages and disadvantages of buying government bills domestically and internationally from investor’s standpoint?

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