It’s popular among the conspiracy-minded and central bank-obsessed (frequently the two go together) to suggest that governments establish central banks to buy their debt. The very notion is self-discrediting.
How could a creation of government serve as the financier of same? How indeed. The answer here is that central banks neither own debt nor print money to buy it.
If they could, it’s important to first point out that the Soviet Union would still exist. If collectivism was bankrupting the former nation, why wouldn’t Mikhail Gorbachev have just ordered Gosbank (the Soviet central bank) to buy up billions and trillions worth of debt to keep it afloat? More modernly, and with the Russian Army supposedly a bit resource constrained, why wouldn’t Vladimir Putin simply order the Central Bank of the Russian Federation to finance a more robust war effort?
The answer to the above questions can be found in the simple, but nearly always elided truth that no one buys, sells, borrows or lends with money.
Read the entire article at Forbes.
