Governments engage in the optical illusion of taking on debt against issued currency.

1. The debt is effectively owed by the Government to itself.
2. The value of the debt is completely controlled and defined by the Government in realtime (insofar as it is denominated in the currency defined by the Government in realtime).

Each of the above points independently are enough to render the debt meaningless.

What would happen if a Government decides to do away with the optical illusion of issuing debt against currency, and instead issue a limited amount of currency every year (say 5% of GDP) to finance its spending?

[I understand that there would be inflation, but that happens regardless of whether or not the Government takes on this cosmetic debt against issued currency.]

Governments engage in the optical illusion of taking on debt against issued currency.

1. The debt is effectively owed by the Government to itself.
2. The value of the debt is completely controlled and defined by the Government in realtime (insofar as it is denominated in the currency defined by the Government in realtime).

Each of the above two points independently are enough to render the debt meaningless.

What would happen if a Government decides to do away with the optical illusion of issuing debt against currency, and instead issue a limited amount of currency every year (say 5% of GDP) to finance its spending?

[I understand that there would be inflation, but that happens regardless of whether or not the Government takes on this cosmetic debt against issued currency.]

Governments engage in the optical illusion of taking on debt against issued currency.

1. The debt is effectively owed by the Government to itself.
2. The value of the debt is completely controlled and defined by the Government in realtime (insofar as it is denominated in the currency defined by the Government in realtime).

Each of the above points are independently enough to render the debt meaningless.

What would happen if a Government decides to do away with the optical illusion of issuing debt against currency, and instead issue a limited amount of currency every year (say 5% of GDP) to finance its spending?

[I understand there would be inflation, but that happens regardless of whether or not the Government takes on this cosmetic debt against issued currency.]

Governments engage in the optical illusion of taking on debt against issued currency.

1. The debt is effectively owed by the Government to itself.
2. The value of the debt is completely controlled and defined by the Government in realtime (insofar as it is denominated in the currency defined by the Government in realtime).

Each of the above points independently are enough to render the debt meaningless.

What would happen if a Government decides to do away with the optical illusion of issuing debt against currency, and instead issue a limited amount of currency every year (say 5% of GDP) to finance its spending?

[I understand that there would be inflation, but that happens regardless of whether or not the Government takes on this cosmetic debt against issued currency.]