Erm no. Money is a token in value exchange transactions. If a government rides on throwing in tokens not backed up by value in the economy, that is not going to last.
Ah. What you're saying is that the money will have less value. I got distracted by your weird usage of imaginariness. So this isn't about money; it's about value.
Yes, austerity results in lowering the value in the economy, which in turn makes it difficult to back money with said lack of value.
No, what I am saying is that the borrowed money are not backed by value in the economy, and that returning them has to be painful.
Now I know Krugman says the value should appear in a puff of smoke once money is thrown in thin air, but that's more a matter of personal belief. Did it help curing the Great Depression? Perhaps; however there are numerous examples of where societies bankrupted themselves with borrowing and spending.
