Q1: For taxpayers, is our “national debt” really a burden that must be repaid?
A1: No. For taxpayers, it is not a real debt. It’s a “Debt In Name Only”, a “DINO”-*

THE DINO IS NOT NOW AND NEVER WILL BE A BURDEN FOR TAXPAYERS. It is rather the buyers of newly-issued bonds who, in a virtual rollover, pay for redemption of mature bonds. In every auction, more bonds are demanded than are available. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed, with cost-free keystrokes, could increase the demand for bonds by buying a large slice of the DINO in the open market.

THE DINO WILL NEVER BE REPAID AND SHOULD NEVER BE REPAID. Only a budget surplus can reduce the DINO. Since Truman, every President has left office with an increased DINO and no annual budget surplus is now in sight. To supply enough risk-free securities used for trade collateral, insurance, pensions, bank reserves, etc., the DINO MUST GROW with the economy! Our world needs the DINO!

Every federal dollar spent and not retrieved by the IRS is saved by the private sector. Yes, Deficits = Savings! The Treasury has a “National debt” and the private sector has a “National asset”. The bad “Debt Clock” is also the good “Asset Clock”. Since, with our trade deficit, we export money, deficit spending is our economy’s SOLE source of savings! In fact, if large budget deficits don’t replace our vanishing cash, deflation will freeze our economy solid. Who would spend a dollar today if it would buy more tomorrow?

Our economy is suffering from acute anemia. Our (DINO + total bank deposits) / GDP ratio is less than half of China’s figure. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one fourth of Hong Kong’s ratio. To become and stay prosperous, we need to DOUBLE the DINO / GDP ratio to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation.

Inequality worsens the anemia. Most of our paltry money supply circulates among the rich who bribe Congress for estate laws to endow wealth to bribe Congress for laws that enrich the rich. Wealth is power and inherited wealth is inherited power: aristocracy, always the enemy of meritocracy!

Q2: Won’t the annual debt interest expense explode the budget?
A2: Some of the savers’ income returns as taxes. New bond issues finance the rest. As no physical resources are consumed and the money supply does not change, there is NO INFLATIONARY EFFECT. Much of the interest is added to the DINO, which needs it. For those reasons, CBO budget economists deal only with the “primary” budget, which excludes the unimportant annual debt interest expense.

Q3: Could savers make a “run” on US Treasury bonds?
A3: 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.

Q4. Could savers prefer another nation’s bonds?
A4. Yes, indeed! SAVERS WILL ALWAYS WANT THE SAFEST BONDS. And if another nation’s infrastructure and productivity become better than ours, its bonds could become safer than ours and we could then lose our bond-buyers. And that could happen if US voters let their DINO concerns stop the renewal of falling bridges, failing schools, creaking railroads, etc. Money can be printed, but infrastructure has to be built with real resources and time, which have no substitutes. We have 60,000 bridges in critical need of repair. There are over 50,000 dams that have to be removed. The entire power grid has to be put safely underground and brought up to date. Most of our schools are in need of repair and renovation. We are slipping into second world status. Worry about that!

Q5: Could foreign creditors refuse to buy US bonds?
A5: If exporters want to sell us their goods, they will have to accept our dollars. And if they stop selling us goods, twenty- five million Americans will get full-time jobs and start looking for cars and homes. But exporters will never stop selling us their goods! And, to earn some interest, they would be wise to trade their US dollars for US bonds.
Q6: Won’t we need higher income tax rates to pay for infrastructure?
A6: Congress NEVER asks the Treasury if can pass a spending bill. In effect, Congress writes a check that Treasury NEVER bounces. To finance a deficit, the Treasury auctions new bonds created out of thin air with keystrokes.

The only rational reason to restrict deficit spending is the onset of harmful inflation. Until then, Congress can
finance both the DINO’s annual interest payment and our much-needed infrastructure. Every day, you fill your sink with water AND you prevent it from overflowing. Why can’t Congress fill our economy with money by building infrastructure AND prevent harmful inflation? China builds 24/7 without harmful inflation. Why can’t we do that?

While a bank holding too many bad loans can certainly hold too many maturing CDs, our non-lending Treasury cannot hold too many maturing bonds unless its deficit spending causes 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 main cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, regulate the banks before stopping work on infrastructure projects!

Q7: How much should Congress tax and spend?
A7: Ideally, Congress should tax just enough to prevent harmful inflation and should spend almost enough to cause full employment (and therefore harmful inflation). Result: prosperity with low inflation.

Instead, bribed by Wall Street, Congress taxes as little as possible, enriching the rich, and spends as little as possible, impoverishing the rest of us by restricting deficits / savings. Just as quacks killed George Washington by bleeding his “bad blood”, Congress is destroying our younger generations by reducing (possibly to zero!) our annual budget deficits / private sector savings increase / consumer demand. And, by bribing Congress to pass austerity budgets, the Wall Street charlatans are deliberately nursing a huge army of unemployed labor to suppress the wages and working conditions of the shrinking middle class.

Q8: How should one vote?
A8: Vote only for someone who NEVER EVER worries about the DINO and who ALWAYS worries about people looking for work and drawing benefits instead of building infrastructure for their grandchildren.

Q9: “I have to balance my budget. Why doesn’t Congress balance its budget?”
A9: If you could legally print money in your attic, why would you balance your budget? You would only need to balance your desires against your family’s well-being. Congress only needs to balance full employment against harmful inflation. Why is something so simple so hard to see?
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Please copy and distribute this message wherever possible.
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The Q & A dialogue above is based on works by: (books cost about $10 at Amazon)

*Frank N. Newman, former Deputy Secretary of the US Treasury, recipient of the Treasury’s annual “Alexander Hamilton” award, author of “Freedom from National Debt” (Two Harbors Press);

*Francis X. Cavanaugh, US Treasury economist for over 30 years, author of: “The Truth about the National Debt”: Five Myths and One Reality” (Harvard Business School Press);

*Warren Mosler, economist, author of “Seven Deadly Frauds of Economic Policy” (Oxford U. Press);

*Dr. Stephanie Kelton, Chair of the UMKC Economics Department, at NewEconomicPerspectives.org.
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© 2014 Marvin Sussman All Rights Reserved. Permission granted only to copy entirely.

I have read this in your previous posts. I replied that the world runs on common sense, not book smarts. Look at all of our supposed scholars in economics running the country. All have their nice degrees in economics from their prestigious schools. I imagine you have one too. Did any of these fine scholars like Bernanke, or Yellen see the financial crisis coming? If not then why? Were they incompetent or did they purposely keep this to themselves? If you say neither and that no one can foretell the economic future, I will say that you are right, just as these people claim they can control our economy, why weren't they able to predict what would happen? They control the economy but can't stop a bust cycle?
The world economy runs on common sense. Countries will do what is necessary to save their political power and Butts. Not one of our high society economics professors seem to understand that. The real world doesn't operate on what one of these professors write in their books, it runs on common sense only.

80 million retirees not working, as well as high-school students

Do you read before you reply?? I am retired and have no interest in working nor do the majority of retirees I know.

The stimulus you complain about is no different then Reagan or Bush did.

Ronald Reagan sent 1.5 trillion dollars (4.8 trillion adjusted for inflation) to the Pentagon who then distributed it among the aerospace, steel, information technology, and all of their inter-related industries. Basically, Reagan created what’s called an artificial demand. And he didn’t stop there. In fact, Ronald Reagan was the most protectionist president of all time. During the 1980′s


Bush just sent everyone 300 dollars how long did that last??

And my point to you which you seemingly don't understand is, why do you think this money will be spent on what it is supposed to be spent on? After all of these QE's and the stimulus, why is our labor participation rate still going down? It is not all because of folks retiring. There are 70 million baby boomers that will be retiring until about 2030. We have well over 90 million unemployed now. You can not blame this on those retirements only! Again why do you think this money will go where it is supposed to go? It never does.

And my point to you which you seemingly don't understand is, why do you think this money will be spent on what it is supposed to be spent on? After all of these QE's and the stimulus, why is our labor participation rate still going down? It is not all because of folks retiring. There are 70 million baby boomers that will be retiring until about 2030. We have well over 90 million unemployed now. You can not blame this on those retirements only! Again why do you think this money will go where it is supposed to go? It never does.

Great to know that debt is not a problem and really is an asset!!!
However, apparently some dumb book keeper in the government doesn't realize we are building assets and reports the amount of interest the government is paying each year. You probably need to explain to them they need to remove this from the liability column and re report it under assets! You know how dumb those accountants are. Now if I can only get my banker to understand that debt is really an asset I will be set for life. Now I understand the democratic method of balanced budget. Who said you can't spend your way out of debt!!!

marvinsussman-is it not true that the only reason the US is not totally bankrupt is that we print some 67billion per month in new money? What happens to your theory if the EURO or some other currency becomes the worlds reserve currency in lieu of the dollar ? Is it not true that China, India and other countries are forming alliances to allow them to trade goods using their own currency rather than the US dollar as a basis? What happens when other countries decide we are no longer a good credit risk and stop buying our debt ? Even a novice like myself can see that the house of cards comes tumbling down. The federal government,like any other smaller government, needs a balanced budget. I agree that some debt is OK but it has to be manageable. Our debt is beyond that point. Good Luck America !!!

marvinsussman-is it not true that the only reason the US is not totally bankrupt is that we print some 67billion per month in new money? What happens to your theory if the EURO or some other currency becomes the worlds reserve currency in lieu of the dollar ? Is it not true that China, India and other countries are forming alliances to allow them to trade goods using their own currency rather than the US dollar as a basis? What happens when other countries decide we are no longer a good credit risk and stop buying our debt ? Even a novice like myself can see that the house of cards comes tumbling down. The federal government,like any other smaller government, needs a balanced budget. I agree that some debt is OK but it has to be manageable. Our debt is beyond that point. Good Luck America !!!