Tuesday, March 29, 2011

A simple way to pay off the national debt!

What’s the difference between a dollar bill and a Treasury?

Nothing. Maybe a little interest.

A dollar bill is a liability of the Federal Government. Just read what it says on that green piece of paper in your wallet: Federal Reserve “note.”

A Treasury is a liability of the Federal Government, too, but it pays some interest and has a term (2yrs, 5yrs, 10yrs, etc.).

Government can issue all the dollar bills it wants.

Government can issue all the Treasuries it wants.

Best way to think of it is the difference between a checking account and a savings account. Your net worth doesn’t change if you have your money in a checking account as opposed to having it in a savings account.

How do we pay off the debt?

The U.S. government can issue dollars to replace the Treasuries. It would be the equivalent of shifting the money from the savings account to the checking account.

Very simple.

So why are we having all this debate about the national debt and solvency?

It’s a non-issue.

These are false beliefs.


Letsgetitdone said...
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Letsgetitdone said...

Very well and simply put. Hopefully people will understand and want to go the next step, which is to know why this is no more inflationary than debt issuance. I wrote something on paying off the debt too. Here's the MyFDL version: http://my.firedoglake.com/letsgetitdone/2011/03/27/is-the-debt-held-by-the-public-really-debt/

There's a link to an earlier post of your on this subject.