[Zuts]

The Australian Govt is going to spend 130 billion supporting individuals and businesses. Where does this money come from?

The Govt can't just manufacture it out of thin air, and it will be real money as it ends up in peoples bank accounts and can be spent in the shop.

So where does it come from? Well they issue Govt bonds. Institutions buy these bonds and pay real money to purchase them. So the Govt gives this real money to people to spend.

Who is buying these bonds? Superannuation funds, banks, foreign countries and the reserve bank. Well the reserve bank can make money out of thin air. In the last week they have purchased 25 billion of these bonds, simply by 'printing'money (they have never done this before). Since it's Aussie dollars manufactured by an Aussie institution there is no foreign debt.

At the end of the day they can purchase all 130 billion that the Govt plans to issue. Generally this may be a problem, but in these days of low inflation it's probably not a problem.

Now, the Govt has to repay this money. How does this happen? Well the reserve bank gets the Govt to redeem the bond, i.e they sell it back to the Govt. How does the Govt get this money to buy back the bond, well they have to get it from you and I via the tax system.

Or do they? The reserve bank can simply 'forget' about the bonds they have purchased and never ask the Govt to buy them back.

At the end of the day 130 billion is only a few percent of Australia's GDP so really it is not that much money.

Assuming that inflation stays low; and it has in the US, EU and other places which do this it really should not be a problem.

Basically the best magic pudding possible.