What if the gov just prints money and resolves these IOUs on behalf of connected people, does it have much of an effect on the economy and if so why. Is this what we are already doing ourselves in the west?
With the US, the treasury uses the fact that the US dollar is one of the reserve currencies (the euro is catching up), and the US government demands payment for their security services to Japan/Korea/etc in USD, etc,etc helping maintain the demand for the USD.
No, it is not.
https://en.wikipedia.org/wiki/Reserve_currency#/media/File:G...
Government money creation should be used for actually productive purposes. While avoiding costs represents some kind of return, it's not clear that's the best plan.