Cullen Roach is too fluid

The USA has an institutional arrangement in which it is a contingent currency issuer. That is, while the Treasury is an operational currency user (meaning it must always have funds in its account at the Fed before it can spend those funds) it has the extraordinary power to tax and issue risk free bonds that the public will always desire to hold so long as inflation is not extraordinarily high. In addition, even in a worst case scenario, the US Treasury can always rely on the Federal Reserve to supply the funds necessary to fund its spending. Therefore, the US government can be thought of as a contingent currency issuer who can issue the funds to spend. This makes it very different from a household. Cullen

Cullen thinks he has discovered the trick. He is wrong. The USA can never run out of paper, but it sure can run out of money. Zimbabwe has all the paper they needed, they could print it up nicely, but it was useless as money.

The effect of money fiat printing by central government is to remove trade from the private sector, to cause private sector  deflation for a while until the money is no longer useful for exchange, then it becomes paper. Cullen is fluid because like Sumner, he thinks money makes for liquidity. No, money just accounts for the liquidity that already exists. Liquidity is the ability to adjust flow, but flow requires like really hard boxes that can carry stuff. These containers are fixed in size and not prone to flow like liquids do. If the containers aren't flowing, then neither is the paper.

Economists are always subject to the hydraulic analogy because it is easy to compute using that model. It leads them to think that excess paper printing by DC leads to inflation. In fact, growth is a prerequisite for inflation. When government dominates the economy by paper printing, the private sector does not grow and deflation, the lack of money in the private sector, is the consequence.

Did the Zimbabwe central government go bankrupt when they switched from Zimbabwe dollars to valuable money?  Absolutely, as did the Weimar Republic.  Excess money printing is a very common cause for government bankruptcy, it is just that monetary induced bankruptcy does not appear in court because debtors bet on paper, and there was still plenty of paper.

Financial brokers deal in money, and they like to have plenty of i floating around, hence their love of middle class funded government debt, it is free float.