No direct quotes come to mind. There are definitely some parallels, with the key difference being that the government can always issue more debt. So instead of a direct default they can have a "soft" default through hyperinflation and the collapse of the money.
Cc nostr:npub1t42gfjzfv74v8xrv65f2lrwd65jr85ysrtdmkkfrvqgcss5r4g0qk487qz What do you think of this? Accurate? I think “…buyer and owner..” would’ve been better. Are there any Mises, Rothbard, etc quotes about this scenario? Also reminiscent of John Law’s French bank.
Discussion
Who’s going to buy the debt? FTX, Terra, and John Law could’ve issued as many tokens as they wanted, but nobody *else* wanted them. Even if they spun up a “separate entity” (say, Alameda), there’s still no real external bid.
Ultimately, the central bank's decision to stop purchasing government debt likely stems from its mandates around economic stability and price levels. However, by stopping debt monetization, the central bank allows suppressed market forces to re-emerge, bursting asset bubbles inflated by artificial credit. This unavoidable recession purges prior monetary distortions.
The central bank then faces a choice: accept the painful but necessary recession to restructure resources toward sustainable uses, or risk reigniting the boom-bust cycle by resuming easy money policies, delaying the reckoning but inevitably fueling higher inflation. The choice is either short-term pain to cleanse imbalances, or perpetuating distortions until they manifest as a graver predicament.