Nick Rowe has a very confusing post about sacrificing goats. To be honest, I didn't really understand the post, but reading some of the comments and his replies, as well as following his link, made it a little clearer. So hopefully, I've got I right what he is trying to say.
The point relates to the possibility of funding government deficits with newly created money, rather than bonds. Nick's point (I believe) is that, given certain assumptions about how the central bank conducts monetary policy, it doesn't make any difference how its funded. If we assume that the central bank is targeting a certain level of NGDP and acting in the market to achieve that (including buying and selling government debt), then any change in deficit funding will be exactly offset by a change in central bank actions.
If my interpretation of his point is correct, then I'd agree with it. However, I wanted to look at a slightly different point (but related, I think).
It is sometimes suggested that funding deficits with newly created money is a way of addressing rising levels of public debt. The concern is that debt must eventually be refinanced, and if there is an ever increasing amount, this refinancing may eventually become impossible at an acceptable price. At this point, the government will be forced into raising taxes. This then leads to Ricardian Equivalence concerns. If debt is inevitable going to lead to higher taxes in the future, then people may feel they need to start saving for it now.
Regardless of the question of how realistic this is, monetisation of debt seems to avoid it. Newly created money never has to be repaid, so there will never come a day when taxes have to be levied to pay for it. So maybe monetary financing of deficits is the way to avoid the problem of rising public debt.
The point I would like to make here, is that if this is correct (and I'd say it is), then it is not actually necessary for the government to carry out the monetary financing. All that is required is the knowledge that they are prepared to do so at some point in the future, if necessary. In other words, once you have admitted the option to monetise if appropriate, you have already removed any constraint that a rising debt level imposes.
If we assume that public debt carries a higher rate of interest than public money, then the debt / money mix will impact on net current transfers. But otherwise, what really matter is whether debt monetisation is an option at all, whether it is actually used is less important.