[jganetsk]

One way to think about it: the world you are proposing is equivalent to one where the central bank fully monetizes all government debt. That possibility is a strict subset of the space of possible monetary policies we have today. The Fed could decide to do that, but it would have significant implications. It would push down interest rates substantially, which would (according to conventional thinking) potentially trigger inflation and incentivize various sectors of the economy to shift their portfolios towards riskier assets in an attempt to pursue greater returns. This could have a substantially destabilizing effect.

Another way of looking at the problem: generally, money is printed by banks, not by governments. The liabilities of the banking sector is precisely what we use as money. A bank is a "debt monetizer": it holds assets (often debt) on one side of the balance sheet, and balances that against money as a liability. https://nathantankus.substack.com/p/banks-as-debt-monetizers...

This property holds true for both central banks and private banks. They both print money that is balanced by assets on the other side of the balance sheet.

There are some benefits to this worldview:

- We have a unified model of banking that explains both central and private banks. "“Everyone can create money; the problem is to get it accepted“ -Hyman Minsky

- In a very real sense, all money is backed by something

If you just print money and use it outside of this framework, you essentially get cryptocurrency: https://www.crisesnotes.com/the-dangerous-brilliance-of-issu...