I’m working on a book about financial concepts and discovered that there are ways to use borrowed money to make more money. It’s not a new concept. People buy houses on credit and the house appreciates in value.

The government borrows money for the same reason. They can generate returns from borrowed money that exceed the cost of the loan. For people, we have to buy financial instruments like stock or a home to get returns.

The government is different. They stimulate economic growth and American dominance through dollar diplomacy, giving away money to allow the US to have access to markets, to put troops and airbases in these countries, to get lucrative trade deals, to put in tax cuts and other programs that stimulate the economy and increase the GDP.

The reason they borrow money is because they are incentivized to do it by the fact that they have always generated more wealth and power from the borrowed funds than it cost them to borrow the money. This means that they will never stop borrowing money as long as they can continue to yield a greater return on their investment. Inflation benefits the debtor, and since the government can create inflation by borrowing trillions of dollars, it will continue to borrow forever, and so will other governments. As long as rates are low enough to generate a return on.

What that means for us is that we need to figure out strategies for coping with rising inflation. I’ll have more on this soon.