Why Bond Issued Doesn't Crowd Out Private Sector Activity

Bond issuance has a dampening effect on private sector activity. If you stop the issuance of government bonds and get the government to borrow from banks through loan contracts, then you kickstart bank credit creation. The same money they were putting in the economy through the right hand through the fiscal spending. They took out of the economy through their bond issuance. And I proved that actually in empirical paper, one by one yen, one yen by one yen crowding out.