Consequences of Central Banks Owning Government Debt

The chapter explores the impacts of central banks, using the Bank of Japan as an example, owning a significant amount of their government's debt, specifically Japanese Government Bonds (JGBs). It discusses the concerns surrounding this practice, including its effects on the bond market, the need for continual bond monetization, and the potential risks of debt monetization leading to hyperinflation. The conversation also delves into historical contexts, such as yield curve control, currency devaluation challenges, Triffin's Trilemma, and the transition from the gold standard to the petrodollar and Eurodollar systems.

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