Yes. Forgot the crowding-out! Especially when “fiat money is scarce” and liquidity is tight - remember those old days when fiat money was actually tight and real interest rates were positive (eg meaning nominal interest rates are HIGHER than inflation) this crowding out effect will work.

Like in small island nations in the Caribbean for instance you see this happening.

When the government wants to invest 50 million euro’s like above, for a small island economy like say Grenada, or Barbados, it crowds out private investement.

So imagine the government going to local banks and say I got this government bond at 6% for my infrastructure project. And it is the “safest” investment you could get bank. Because I can eventually print money to pay you back.

What do you think the bank with a convervative investing policy would do?

Do you think that bank would invest in a 50 million all inclusive hotel? The hotel business owner gets declined. The bank lends money to the government.

Now you won’t hear me saying the 50 Million euros all inclusive hotel is not risky and more productive. And that that big infrastructure project is not productive.

But I bet you the hotel business owner has a super calculated plan about number of tourists, rate per room, how long tourists stay. Etc. The hotel business owner makes a calculated risk because he knows “sorry” that his “balls” are on the table. If he can’t pay he is bankrupt.

While the government Minister has a 4 year’s horizon. The public servant architect creating the huge infrastructure investment plan has a 20 years horizon. How can I make my pension.

This is crowd out. Less productive public investments prioritized before more productive but risky private investments.

What you said about the yield I don’t yet understand. Could you elaborate about that? How does the yield spread benefits the government?

How do you define the yield? How does that work?

Thanks