When and why did governments impose restrictions on money creation

In any healthy economy, the central bank is independent of the executive government. (Since the central bank can be thought of as part of the 'government', I want to be specific about which parts of government I am referring to—by "executive" I mean the body of people who are in power and who administer policies.)

This separation is in order to separate fiscal policy from monetary policy, as this makes it easier to achieve monetary policy objectives. Otherwise, the executive could enforce money creation merely to achieve some objective, such as increased government spending or a decrease of local-currency denominated debt, but this would send inflation skyrocketing. Instead, the executive (through the Treasury) sells bonds on the open market. Any entity is free to buy those Treasury bonds, and the price is determined by the market. (An executive that controls the central bank and forces them to buy Treasury bonds is not really independent of the central bank—it is just a show.) So, the Treasury selling bonds is how the executive raises money for itself, but it also increases the demand for money, so the central bank needs to be part of the group of entities that buy the bonds, in order for interest rates to remain unchanged. Needless to say, when the central bank buys bonds, it is increasing the supply of money.

I give you my guess... whatever it worth. First, when government sells bonds it doesn't necessarily creates new money... public purchases those bonds with existing money, with expectation to be repaid with interest rates. And how government repays? By collecting taxes. So as you see, this is not printing money... this is borrowing from the public, and later repaying it back with public tax money...

I do not believe that any central bank in any country is truly "independent". Now from time to time the central bank will decide to print new money, and purchase government bonds with it... and then "forgive" the government debt. When the central bank does this, then you may call it "printing new money".

Why governments play this game, where there is an illusion of an independent organization (central bank) that decides how much money to print? I don't know... I guess they want to make it look like that the national currency is not a simple paper that the government can print any time it wants, so they create this illusion of a complicated and obscure process how new money is printed and pretend that nobody understands what is going on.

I don’t think there is any official restriction. In fact during the recent Great Recession there were many considerations of central banks being involved in helicopter money by some economists arguing that inflation expectations could be raised with for example by central banks depositing certain amount of money to every single individual (although this did not come to be nor it was ever advocated by a large majority).

Also during their respective quantitative easing (QE) programs both ECB and Fed purchases private debt too - so the money was not created just with the government bonds.

Rather the reason why it’s being done through government debt is the practical one. Increasing demand after government debt lowers the interest at which government borrows and all the interest that government pays to central bank is usually send back right to the government treasury. So it’s practical in the sense that government lowers its borrowing costs by doing so. Central bank purchasing bonds is for all practical reasons equivalent of just depositing the money into government account but in addition it lowers the market interest rate for its bonds at which also the private investors buy them.

Another advantage of doing this through bond purchase is that central banks sometimes want to contract money supply. If it would be done through direct depositing to government account that would create a situation where bank has to withdraw money from government account ending in some silly situation where cash strapped government has to borrow just so the money supply can contract. With bonds this is not an huge issue.

Originally there was real money. Gold coins. Then paper that could be turned in for gold but was easier and lighter to use. Then governments stopped backing the paper with gold and just printed more paper 'money'. Later computers let them do the equivalent in a database without any physical printing.

In the US Nixon took the country off of real money in 70s. The dollar was sinking and he said they would support it by selling gold to prove the value. Unfortunately they quickly ran out of gold and stopped doing that.

In more recent times many countries have been demanding their gold which we held physically here be returned. The US did not have enough gold to repay everyone and told Germany it would take 7 years until they got all theirs back. If we actually had it it could have been done in months or even weeks but the US had to buy more gold somewhere to have any to return what was owed.

Other countries have had similar situations with real money, backed money, and then fiat money. Some just started out with fiat and like Zimbabwe ended up very badly by printing too much.