You inspired some debt jubilee reading!

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"It wasn’t necessarily out of kindness that rulers did this (although a significant subset of them aged well in history and were wise); it was basically just a solution to a societal math problem. It’s like if you run a computer long enough, eventually it starts to work less efficiently, as memory leaks and other issues build up. it starts to freeze and slowdown, frustratingly. It’s a mildly unstable system in other words. Refreshing the power and rebooting the system gets the computer running smoothly again.

Debt jubilees generally served that purpose; an occasional reset to wipe out some of the growing instabilities from prior generations, and begin with a cleaner slate and a renewed social contract. Otherwise these societal imbalances tend to cleanse themselves with more violent revolutions, with the many poor vs the few rich."

"Fiat currency is a game of confidence. It’s not backed by anything other than legal force and guardrails that create firm rules for how it can be issued and by whom. To break those rules is to risk breaking the currency. Everything is backed by something else and if you remove the backing, then there is nothing.

In practice, during government debt crises, this independence between the government and central bank weakens. The Federal Reserve was basically “captured” by the Treasury Department from 1942-1951 in order to fund the war and peg Treasury bonds below the inflation rate, for example."

"if the central bank has trillions of dollars in negative capital, it is no longer independent, because it is no longer solvent. It has no real authority to do anything independently at that point, all illusions of independence are gone, and it is entirely reliant on the government for its solvency. The whole idea of how money works in the modern fiat currency system ceases to make sense at that point."

"We can’t just remove one piece of it, like government debt from the central bank balance sheet. The monetary base is collateralized by government debt, and government debt is supported by expanding the monetary base when needed. It’s basically an ouroboros."