All money in modern economies is based on this kind of debt. Central banking is... confusing.
The immediate effect of the fed doing that isn't catastrophic, it's just devaluing the US Dollar, or put in another way, inflation.
Inflation at a certain level is thought of as a good thing, the fed and economists have inflation targets where they don't want it to be too high or too low. One of the thing that moderates inflation is how the fed creates money and lends it out.
The recipe for WWIII is runaway inflation where in order to keep things together, a central bank issues money at an exponentially increasing rate with a very small doubling period and the currency becomes worthless in trade with other currencies and to purchase goods.
The US is very far away from that. The increase in the deficit and debt is problematic and significant, but not anywhere near catastrophic.
Interestingly, deflation can also cause wars and lead to an economic downward spiral where everyone is worse off. Retaining the Gold Standard was a major contributor to both WW1 and the Great Depression. Japan’s deflation lost it a decade of economic growth more recently.
The immediate effect of the fed doing that isn't catastrophic, it's just devaluing the US Dollar, or put in another way, inflation.
Inflation at a certain level is thought of as a good thing, the fed and economists have inflation targets where they don't want it to be too high or too low. One of the thing that moderates inflation is how the fed creates money and lends it out.
The recipe for WWIII is runaway inflation where in order to keep things together, a central bank issues money at an exponentially increasing rate with a very small doubling period and the currency becomes worthless in trade with other currencies and to purchase goods.
The US is very far away from that. The increase in the deficit and debt is problematic and significant, but not anywhere near catastrophic.