A lot of debt also arises because of savings needs. If everyone is saving for retirement, for example, that savings has to be debt marked somewhere else. Examples:

* Social security used to have a huge surplus, that was savings that had to go somewhere (even if it was just a savings account in a bank, the bank would then be able to lend it out). They instead buy treasuries and that savings becomes debt to the USG.

* China likewise needs to save dollars because it doesn't want them sloshing around in their economy leading to inflation, so instead of using it to buy things they buy treasuries, and their savings becomes debt to the USG (not always a great deal for China if interest rates are below inflation).

The dollar has been so useful in the past as a currency of trade because you could save large amounts of it easily by buying US treasuries. One reason China doesn't want the RMB to be used so heavily for trade is that they don't want to do the same yet.

Actually it kind of is, in as much as it expands the money supply.

When a bank issues debt, the money is created 'out of thin air'. When the debt is paid off, that money is destroyed. However usually more debt is being created than redeemed as things go on, so the total money supply increases (this is a good thing, as it allows the economy to expand).

Various regulations and central bank market interventions (quantitative tightening/easing) control this process, which thus can be induced to 'print money' if the government wishes - assuming they have a sovereign currency.

Fractional reserve banking is still not the same as printing money outright

If you borrow $100 USD from the bank, and pay it off immediately after, it's clear no money was "created" as such

If $100 USD is "printed" outright, it's clear that there's no way to achieve that same result

The fact that the debt isn't generally paid back immediately doesn't change that fundamental. That's what I meant when I said any apparent "change" is about "time" rather than "money"

It is true that the money supply should expand with the economy. Turning raw materials into finished goods represents a larger "net economy" at the end of the process than at the beginning. (Indeed that's basically how it makes sense to have interest on debt in the first place)

Nevertheless, printing money out of whole cloth is different from issuing debt

> If you borrow $100 USD from the bank, and pay it off immediately after, it's clear no money was "created" as such

The bank "printed" money by handing out cash that it didn't have. It only had a fraction of it. That new money went free into the world with the same respect any other cash gets. You and I can't pull that off.

> That new money went free into the world

Along with a "-$100" IOU on the books

That is different from merely "printing money"

> Along with a "-$100" IOU on the books

Which they can use as an asset to create (lend out) even more money that they don't have.

Call it what you want, but the bank is adding money to the economy that wasn't there before.

The bank is essentially converting a short term IOU (liquid deposits) into a longer term IOU (the loan)

It's a function of time (mediated by interest rates, subject to market demand, namely liquidity preferences)

That's not the same as outright "printing money" which is not backed by any deposits (what does the balance sheet look like when "printing money"?)

Ok fine I'll agree call it "creating money" rather than "printing money", because it's not the same mechanism the central bank uses to "print" permanent money (technically not printed either but whatever), but money is still created by the bank.