this post was submitted on 21 May 2024
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GenZedong
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China is just like the US in that it has fiat monetary sovereignty, so it can always pay any debt denominated in its own currency by simply willing it into existence. The deficit is simply sum total of money the state has created via spending minus the money it has destroyed via taxation. If it has significant debt in other countries’ currencies, that’s another matter, but I don’t think it has that problem.
But if they will that money into existence, that would make the Yuan less valuable and lead to inflation.
It can if they spend enough of it without taxing any of it back out. However the relationship between the money injected into the economy and inflation is not as inevitable, mechanical, nor 1:1 as neoclassical economists claim. Finding the Money explains this a bit.
Another common trope is “hyperinflation,” which the PEGS Institute also dispels: What Caused Hyperinflation In Weimar, Zimbabwe And Venezuela?
I found a YouTube link in your comment. Here are links to the same video on alternative frontends that protect your privacy: