BEHIND THE NUMBERS
Government borrowing is always and everywhere an economic phenomenon, to abuse Milton Friedman's classic quotation.
The fact is, the state can blatantly borrow from us and run a Ponzi scheme that will continue to take money from future generations. Economists call this "seignorage revenue". Its mechanics are simple as long as the state, the central bank included, is legally capable of printing money. Its direct impact is inflation. In effect, the state borrows by printing money at the expense of the public's purchasing power. The potential fallout can readily be seen from the Latin American crisis of the late 1980s.
Certainly, there are some laws and regulations that central banks stick to when they carry out currency expansion. However, in the case of Thailand, we can't claim that every baht that is newly created is backed by some amount of reserves.
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