Comment by JumpCrisscross
14 hours ago
> the TA said “yeah I guess repaying debt is like destroying money” as if they had never thought of that before
They shouldn't have been a TA. Modern money is destroyed in three ways: through taxation, defaults and the extinguishing of debts.
Taxation destroys money?
Yes, the government doesn’t have a checking account. When it spends money, that money is created and its balance sheet grows. When it receives taxes the balance sheet shrinks as the money is destroyed. If there’s a gap it gets filled by issuing bonds. Thats the national debt. These are conventions, not absolute rules, so governments can go rogue but it doesn’t end well