Why does the government have to borrow money to run a deficit?

 

Source: https://www.mmted.org/smithfamily/  Episode 12

Doesn't this cause hyperinflation?  The counter argument is what about Japan.  (But Japan didn't do this, the Central Bank has government bonds to secure the Yen they created).

Could the Central Bank treat this as an interest-free loan (or at 0.25% interest)?  So from the bank's perspective, they would have an asset, which is the loan, and a liability, the Treasury general account.  From Treasury's perspective, they would have an asset, cash (which they would promptly spend), and an offsetting liability - the loan owed to the Central Bank.

How does a loan from the Central Bank differ from a government bond?  (Well, anyone could own a bond, but the Central Bank would be the only owner of the loan).  There isn't really any practical difference.

How would the loan (or government bond) ever be paid back?  This is the real question.  For the accounting transaction to work, it must be a real liability.  But a loan (or bond) that is never paid back isn't a real loan, it is a gift.