It entirely depends upon how the government uses that money. Paying down national debt is entirely deflationary; they are literally removing money from the economy. Spending on services can be very mildly inflationary, but usually also increases quality of life for the most marginalised and therefore reduces the impacts of inflation on those who feel it most. It can also be deflationary when spent on services, especially if those monies are spent on the government shouldering costs that have been pushed onto the average citizen (single-payer healthcare, energy costs and the like).
By far the biggest upward effects on inflation are caused by corporate greed and geopolitical instability.
I see you’re on my instance so using Australia as an example - national debt is not getting paid down and is growing year on year. There is therefore no monetary deflation being applied. This has been the case since the GFC, debt has only really been growing
That’s why I specified in my first sentence that it depends upon how the monies are spent. I outlined a few different ways in which government spending impacts inflation.
Just paying down interest on national debt (as we have been doing) is just as deflationary as paying down principal, given that it’s removing money from the economy.
Those who hold treasury bonds don’t tend to spend the interest on their day-to-day living costs. Those who hold treasury bonds use them as an investment vehicle, whose proceeds are usually either reinvested or invested elsewhere where the effects of investment aren’t inflationary. Many treasury bonds are also held by the international community, who by definition don’t spend those proceeds within the country whose bonds they hold. Domestic Australian retail investors make up such a small fraction of total ownership and, those that do own them in this context, tend not to use the proceeds as regular income that would be inflationary.
It entirely depends upon how the government uses that money. Paying down national debt is entirely deflationary; they are literally removing money from the economy. Spending on services can be very mildly inflationary, but usually also increases quality of life for the most marginalised and therefore reduces the impacts of inflation on those who feel it most. It can also be deflationary when spent on services, especially if those monies are spent on the government shouldering costs that have been pushed onto the average citizen (single-payer healthcare, energy costs and the like).
By far the biggest upward effects on inflation are caused by corporate greed and geopolitical instability.
I see you’re on my instance so using Australia as an example - national debt is not getting paid down and is growing year on year. There is therefore no monetary deflation being applied. This has been the case since the GFC, debt has only really been growing
That’s why I specified in my first sentence that it depends upon how the monies are spent. I outlined a few different ways in which government spending impacts inflation.
Just paying down interest on national debt (as we have been doing) is just as deflationary as paying down principal, given that it’s removing money from the economy.
Where the money goes to holders of treasury bonds who then spend it again
Those who hold treasury bonds don’t tend to spend the interest on their day-to-day living costs. Those who hold treasury bonds use them as an investment vehicle, whose proceeds are usually either reinvested or invested elsewhere where the effects of investment aren’t inflationary. Many treasury bonds are also held by the international community, who by definition don’t spend those proceeds within the country whose bonds they hold. Domestic Australian retail investors make up such a small fraction of total ownership and, those that do own them in this context, tend not to use the proceeds as regular income that would be inflationary.