Welcome to money for the rest of us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it.

I'm your host David Stein. Today it's episode 478. It's part two of our National Debt Masterclass.

Last week in episode 477, we reviewed four principles when it comes to the national debt.

First, the debt will never be paid off.

Second, governments can control the terms of its debt issuance, including the interest rate.

Three, government debt doesn't crowd out the private sector's ability to borrow and invest.

There isn't any crowding out. And four, that doesn't mean governments get a free pass.

There are consequences to government borrowing and government money creation.

Too much of it can overwhelm the private sector leading to inflation.

In that episode I shared portions of money for the rest of us episodes that were released in 2014 and 2017.

And I would characterize those episodes as I wasn't overly concerned about the national debt.

This week though, I'm sharing a portion of episode 295.

It was released in April 2020 during the pandemic lockdown.

We watch as the Federal Reserve and other Central Banks took unprecedented action to monetize

the national debt, but also purchase other assets such as corporate bonds and

ETS.

In that episode, we shared how governments and central banks can get into trouble if households and businesses don't want to hold the currency.

We're worried about currency devaluation or debasement or inflation and how that could potentially lead to

Central Bank insolvency. That had really occurred to me at least specifically

how it could happen until I released episode 295 in April 2020 and I pulled

from work by Ricardo Race who was an economist and professor at the London School of Economics.

I said some things though in that episode they weren't entirely correct.

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