Evaluating a Claim about Public Debt
A political commentator makes the following statement: 'When a country's central bank buys government bonds, it's just the government's left hand lending to its right hand. This debt isn't real debt owed to the public, so it has no meaningful economic consequences and can be effectively cancelled without issue.'
Critically evaluate this statement. In your response, first explain the formal accounting relationship created between the two entities by this transaction. Then, argue for or against the commentator's conclusion, using your understanding of this relationship to justify your position.
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Economics
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Introduction to Macroeconomics Course
Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Evaluation in Bloom's Taxonomy
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