There’s only one reason a government issues bonds. It’s so their account with the central bank is not overdrawn. It’s only regulation that stops the central bank from saying a rapidly expanding deficit is fine. After all, it’s an indicator of how much government money has gone into supporting the private sector. But economists and finances see that as monetising finanacing, and it’s a no no. Instead, regulations insist bonds are issued to the value of the government’s spending deficit. But what purpose do they serve, other than allowing investors to influence their price and yield, often as a response to government spending. In short, they seem to think their market pricing can influence government policy. So, why do we pay so much attention to an artificial process that only happen because we can’t trust governments to regulate their spending and keep inflation in check.
