Given the distinct roles of fiscal and monetary policies in modern economies, no systematic relationship should exist between public debt and liquidity in typical economic settings. However, data from recent two decades show a robust positive relationship without fiscal spending based on large-scale quantitative easing, a finding that is also supported by a thorough econometric analysis. We present rare evidence that excessive fiscal spending shocks partly led to bond acquisitions and open market operations by the central bank in the era of low borrowing rates and price stability, thus generating the observed positive correlation. Fiscal debt is found to boost liquidity substantially over the sample period of 2003–2021.