Q1: Is our so-called “national debt” really a serious debt, an interest-bearing burden that we must repay?
A1: No, It lacks the two essential qualities of a really serious debt. It’s a “Debt In Name Only”, a “DINO” -

1. A really serious debt is a burden. Our DINO is not now and never will be a burden for taxpayers.

Our DINO is the total value of all issued and still maturing treasuries. Who pays for the redemption of mature treasuries? Not the taxpayers! The buyers of newly-issued treasuries pay for the redemption of mature treasuries. It’s equivalent to a simple bond rollover done every day. In every auction, more bonds are demanded than are available from the supply of new issues. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed could even create an artificial demand for US Treasury bonds by buying large quantities of them in the open market with a few cost-free keystrokes. Where’s the taxpayers’ burden?

Our Treasury does not borrow money like a home-buyer taking a mortgage. It is rather a custodian of funds, like a bank accepting money offered for certificates of deposit. While a bank with too many bad loans can certainly have too many maturing CDs, our non-lending, fiat Treasury cannot have too many maturing bonds unless its deficit spending is causing harmful inflation. And that happens ONLY in a war or emergency requiring rationing. It NEVER happens during a recession. During prosperity, banks are ALWAYS the sole cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, don’t restrict infrastructure spending for the future! Regulate the banks!

The Treasury auctions bonds only because Congress requires that the proceeds finance the annual budget deficit. This requirement, now a relic of the former gold standard regime, was suspended during World War II, followed by 35 years of strong economic growth without harmful inflation. Now, under our fiat currency regime, Congress can again finance deficits out of thin air without auctions, the same way your corner bank financed your home mortgage.

Calling our DINO “unsustainable”, Wall Street con artists have panicked the public and many ignorant journalists and politicians in Congress and in the White House. It’s a hoax meant to yield a fortune in commissions by privatizing Social Security and Medicare. And, by bribing Congress into austerity, the Wall Street charlatans are nursing a huge army of unemployed labor to suppress middle class wages and working conditions. As our rotting infrastructure renders our industry incompetent, it is that growing army of unemployed labor that will become “unsustainable”.

2. A really serious debt must be repaid. Our DINO will never be repaid and should never be repaid.

Only a budget surplus can reduce our DINO. Since dropping the gold standard in1971, we have rarely had even a modest budget surplus. None is now in sight. To supply enough treasuries, the ONLY risk-free instruments used for trade collateral, insurance, pensions, bank reserves, etc., our Dino must continue to grow along with our economy. In fact, deflation and then depression will hit us hard unless big budget deficits replace the cash now flowing into China.

Q2: Could savers make a “run” on Treasury bonds?
A2: Yes, when savers can get risk-free returns from the Wall Street casino or from GM bonds, Illinois bonds, or Detroit bonds. Safety is not everything. Safety is the ONLY thing! That’s why the whole world relies on US bonds.

Q3. Could savers stop buying Treasury bonds?
A3. Sure, when nobody needs risk-free interest for insurance, pensions, trade collateral, bank reserves, etc., etc.

Q4: Could savers prefer foreign sovereign bonds?
A4: Yes, indeed! So far, almost two thirds of the world’s reserve currencies are in US dollars and half of all US Treasury bonds are held by foreigners. But if China’s infrastructure (and so, its productivity) becomes better than ours, its sovereign bonds could become safer than ours. But that could happen only if US voters worry more about our DINO than they worry about our falling bridges, failing schools, leaking sewers, aging power grids, etc., etc.
Q5: Won’t we need higher tax rates to pay for infrastructure?
A5: Congress does not use or need our taxes for spending. The IRS repossesses most federal spending ONLY to prevent harmful inflation and then destroys every cent of it. (Cash payments are shred and sold). For spending, Congress creates new money out of thin air, deposits it in the Treasury, writes checks, and makes the Treasury auction bonds to finance the deficit, which is limited ONLY by Congress and NEVER by the availability of revenue.

Every dollar spent and not repossessed by the IRS is saved by the private sector. Our annual budget deficit is exactly equal to the annual increase in private sector savings. YES! DEFICITS = SAVINGS! No deficits, no savings! A tax deficit is a savings surplus. It is money left on the table for the savers by Uncle Sam because he didn’t need it to prevent harmful inflation and because consumers need it to consume. We do not have a “national debt”. We have a “national savings”. The bad “Debt Clock” is really the good “Savings Clock”. How can we have too much savings?

Since bank loans must be repaid with interest and hard cash is moving to China, budget deficits (surpluses!) are the ONLY savings source that can sustain our economy. We need to DOUBLE our DINO / savings to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation, even with very high tax rates. Our (DINO + total bank deposits) / GDP ratio is less than half of the comparable figure for China. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one quarter of Hong Kong’s ratio. Too much savings?

Your arguments about debt/inflation, national debt/public debt, are just background noise.I don't have answers, only observations of how the Obama Administration is beginning to show their true progressive left wing agenda. It is becomming increasingly harder for Americans to control their assets that they have worked for all their lives. Given the far-left lurch since Obama has been in office,we have seen a speed up of America’s decline. And remember Obama’s words to Russian President Dmitry Medvedev — that he would have “more flexibility” when he never had to face voters again. The danger to American prosperity and liberty is not economic inequality or unfettered markets but a rights-violating government.

I am another Gray-Haired Geezer signing on. I like being left alone to enjoy my life. As luck would have it we aren't going to be left alone to enjoy our twlite years. We are at a turning point in the America and being an old fogey, geezers, senior citizens, "Baby Boomers", and in some cases dinosaur, doesn't give us the excuse to sit back and expect younger Americans to take over the helm. It was mostly the young people of this nation who elected Obama and the Democratic Congress. You fell for the "Hope and Change" which in reality was nothing but "Hype and Lies." Many of those who fell for the "Great Lie" in 2008 are now having buyer's remorse.
With all the education we gave you, you didn't have sense enough to see through the lies and instead drank the 'Kool-Aid.' Now you're paying the price and complaining about it. No jobs, lost mortgages, higher taxes, and less freedom.

During WW II, the government was paying EVERYBODY for four years to build nothing useful for a peacetime economy. With rationing, wage control and price control, there was no place to put after-tax money except a low interest bank account or a higher interest war bond. That's why we avoided harmful inflation.

The war was paid for largely by fiat money and the war bonds were redeemed with fiat money. That's why we had enough money to build the suburb where you probably live.

There's nothing like spending a lot of fiat money to bring prosperity. Too bad you old geezers have such a bad memory.

Fiat money is backed ONLY by the government's "full faith and credit". It is interesting that all the worry about deficit spending is due to the fact that blockheads cannot understand that fiat money has no intrinsic value.

The US government has absolutely no need to balance it's budget, anymore than you would need to balance your budget if you could legally print dollars in your attic. A fiat economy has to worry about only three things:
1. inflation, which is now days entirely due to a shortage of goods, not an excess of money. That cannot happen during a recession with 20 million people looking for full time work.

2. unemployment, which is due entirely to a lack of demand by consumers and can only be cured by deficit spending on much-needed infrastructure, killing two birds with one stone.

3. the foreign exchange rate, which can put us at an advantage or a disadvantage compared to other nations. An advantage accrues to the nation with the best infrastructure: education, transportation, communication, healthcare, and defense.

It has always amazed me how the flag-waving conservatives are the most dead set against deficit spending on infrastructure that would end unemployment and make us the superior nation, all because they are worried only about inflation, which is nowhere in sight and which can be stopped on a dime by raising interest rates. And they also want higher interest rates!!!