Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues the greater is non-government wealth held in the form of public debt.
Answer: True
The answer is False.
The correct answer is based on the fact that the when the government swaps bonds for reserves (which it has itself created via its spending) it is providing the non-government sector with an interest-bearing, risk free asset (for a sovereign government) in return for a non-interest bearing reserve. Reserves may earn a return but typically have not.
The bonds are thus part of the non-government sector's stock of wealth and the interest payments comprising a flow of income for the non-government sector. So all those national debt clocks are really just indicators of public debt wealth held by the non-government sector.
I realise some people will say that the stylisation of government funds being provided by MMT doesn't match the institutional reality where governments is seen to borrow first and spend second. But these institutional arrangements only obscure the essence of a fiat currency system and are largely irrelevant.
If they ever created a constraint that the government didn't wish to accept then you would see institutional change being implemented very quickly. The reality is that it is a wash - net government spending is matched by bond issuance - irrespective of these institutional procedures and the government never "needs" these funds to spend.
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