That's true but I'm still not sure why you're not considering that borrowing, as those instruments that the Treasury auctions off may help balance the books for now, but they are still debt obligations that require repayment of the principle plus interest at a certain time in future.
U.S. money whether in the form of bank reserves or Treasuries represent government liability. And certainly that would be true of government bonds whether denominated in dollars or in another nation's currency. However it is impossible for a government to borrow in its own currency. Were the United States to actually borrow by issuing bonds, those bonds would have to be denominated in another nations currency. Quite a few countries have real debt
, but not the U.S.
There are a number of ways this can be understood. (just saying "no nation can borrow in its own currency because that would be borrowing from itself." is true, but it doesn't explain why it is true.)
I'll attempt an explanation based on a fundamental requirement of all true borrowing. That is the requirement that productivity be expended as a necessary condition of the loan being paid back.
Now let's compare two sequences of events which to the casual observer would both look like borrowing. After each sequence is described, ask yourself if true borrowing is represented.
Imagine you have a money machine and the money it creates, at the push of a button, is in great demand everywhere. Whereas everyone else must expend their productivity to obtain money, that is only an incidental condition for you. If it suits your purposes all you need do is push a button. (Economists will recognize your situation as being equivalent to a situation they might describe as, "having deep sovereignty over your money".)
Now, lets suppose you want to buy a car but you decide rather than push the button you will "borrow" the money you need, get the car, and pay back your lender later by pushing the button. To pay your lender there will be no expenditure of your productivity required. [this is not real borrowing because the overall operation is missing a necessary component of borrowing.]
Now imagine this same scenario, but you have no money machine and the only way for you to obtain money is by expending your own productivity. You buy the car with borrowed money, and then you work hard for five years setting money aside to pay off your car loan. You have expended a considerable amount of your productivity to pay off the loan. [This is an example of real borrowing.]
Now, let's consider a similar scenario to the first one I described above, but one
exactly equivalent to what a nation like the U.S., that supplies the world's most used Reserve Currency, can, and does, in fact do on regular basis. Then you can decide for yourself whether there is an expenditure of productivity in the overall operation, and whether it constitutes real borrowing.
You have the money machine and deep sovereignty over the money it creates, as in the first scenario. You want to buy a car and you therefore push the button of the money machine until exactly enough comes out to pay to the penny for the car. You buy the car with the money you just printed. Next, you give the car dealer an I.O.U. and take back the money you just paid for the car. You agree to pay the full amount owed on the I.O.U. ten years to the day you got your money back and in the mean time you use your money machine to generate interest to pay the car dealer for the use of his money. When the ten years is up, you use your money you got back from the car dealer, using the I.O.U., to pay off the I.O.U. You call this "borrowing". Is it? Does it satisfy the requirement of an expenditure in productivity? If it isn't borrowing, what is it? And why does the U.S. do this ?
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