Monetize the debt financial definition of monetize the debt

Monetize the debt

Monetize the Debt

In government, to

print money

in order to



national debt

. For example, suppose a government is $1 trillion in debt. Theoretically, the government can simply expand the

money supply

by $1 trillion and reduce the national debt to zero. It is not uncommon for governments monetize their debts, but because it increases the amount of money in circulation, it is considered highly



monetize the debt

To convert government debt from interest-bearing securities into money. Although both the securities and the money are considered government debt, the latter can be used to purchase goods and services. Thus, monetizing the debt is considered an inflationary process and, although it may temporarily depress interest rates, it is likely to result in higher interest rates and lower bond prices in the long run.


Leave a Reply

Your email address will not be published. Required fields are marked *