It is the citizens who suffer

This is basically the equivalent of minting a trillion-dollar platinum coin. It basically shows that advanced countries that borrow in their own currencies don't face financing constraints

 As government borrows liquidity, private citizens have less.  Liquidity is conserved.   Eventually the citizens rebel. Pricing also fails since the private sector banking system contracts. We end up with a command economy.

Does this make government insolvent?  Insolvency is not the issue, pricing no longer work so it is a command economy.

Interest payments are not cheap. Our interest costs divided by debt still comes in about 2.5%. ANd no, inflation does not necessarily raise taxes.

So, with government consuming the liquidity the value chains in the economy are not supportable using the tax dollar. The private sector contracts continually, the system is not stable as government cannot run value chains.

No one is paying government to borrow. We are suffering a deflation, the money will be worth more than its current value.  More debt creates more consumer deflation as the private sector shrinks from lack of liquidity.

So government borrowing just draws on this pool of excess savings. Furthermore, in so doing it helps prevent an even steeper economic contraction

The charts says the at the more often government plays this trick, the lower the growth rate.

Will the stimulus bill help? Not much — because it really isn't stimulus, nor should it be. This isn't a conventional recession, it's more like a medically induced coma; we want workers to stay home, and give them disaster relief, which is what the bill mostly does

Part recession part corona panic.  Read the charts, they indicated a recession soon long before the virus.

And the evidence that we're not prepared to provide relief soon enough or to enough people continues

Congress is a poor allocator of liquidity.  In fact, your constant rants about repubilcans are proof. You do not even believe government is a good alocator of liquidity.  The senate and house still make the decisions based on what they hear.  There is no S/L function up and running.  As the disaster continues Congress will know less and less about where liquidity is needed.  Krugman tweeting obsessively about republicans does not help.

Krugman brings up is Hicks chart.   My equivalent chart has the savings and loan as a single trade, humongous, between reserve banks and Treasury.   The Fed has no liquidty in that condition, it cannot adjust to market conditions, there is no liquidity market. And the Fed is now in no position to even step back toward the last point on the curve.  That leaves Congress to rebuild the liquidity markets, and Congress does not have that capability.  It id time for a New Fed contract.

Reading he tweets I heard that Keynes did not think national economies naturally converge without government intervention.    That is sort of a tautology since national means central government. But convergence is not growth, just agreement.  During a correction, it is not always clear who is being corrected. 

Take the stimulus, stimulating what?  Generally consumers are hit with a price they cannot meet and go home, a demand collapse.  So central government buys from the privater sector and creates demand congestion causing workers to be hired..   That gives time for the constraint to be solved r worker pay raised to pay for the constrained good.  Government never needs to know what the constraint was.   Why did government wait for the sudden stop? Because govermment and the porivate sector a do not converge, a contradiction. If government can spot arbitrage, then there would be no stops.

Why didn't shale start earlier, say 2006?  Labo was too high, likely, and interest rates too high. So oil supply remained short and demand collapsed. Then rates went low and the rigs took off. 

Oil prices were volatile,high. Not sure why. But the contraction left money on the table and fracking took off.

This is a case of the oil channel unable to make adiabatic change, likely the result fo oil consumption arising everywhere unknown to us.  Our oil channel is likely unstable because we use the pretro dollar for common exchange.