Since 1998 the U.S. government has issued $719 TRILLION of debt. That's 719 T-R-I-L-L-I-O-N. This is not a typo.
And guess what?
Interest rates are at zero and the dollar is very strong.
Of course we know that all that debt is just really dollars. So another way to say it is that since 1998 the U.S. Treasury PRINTED $719 trillion dollars.
And guess what? No inflation.
We also know that the government redeemed (paid back) all but $18 trillion of that debt. So it "paid back" $701 trillion.
The $18 trillion (what everyone is hysterical about--our national "debt") we got to hold on to.
That's all this debt nonsense is about.
Here is the year-by-year breakdown of how much debt was issued. It's right from the Treasury's own statement. I am not making this up. I just put the numbers in a spreadsheet. By the way, these data only go back to 1998 as I said, however, if you went back to the birth of the Republic, that is, 1789, the total issuance would surely be in the quadrillions and again, no collapse, no skyrocketing interest rates, no inflation.
Image: Treasury issuance in millions $
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ReplyDeletewhile I love the number for its shock factor, to say that that money was "taxed away" is not right Mike. In reality, that money was simply shifted back and forth between checking and savings accounts at the Fed + commercial banks, taxes really played no role in these transactions.
ReplyDeleteGood point. Will change.
ReplyDelete"Can taxes and bonds finance government spending?" Stephanie Bell 1998
ReplyDeletehttp://estes.levy.org/pubs/wp244.pdf
There is a new age of economics that is now coming to deal with these issues. A P.R. is coming out about it in the next couple of weeks. See http://ow.ly/KlkKM www.DotMoney.Cash www.GlobalCurrencyReserve.com
ReplyDeleteMike, your argument that government issuing debt is equivalent to it printing money is wrong and harmful to those that don't have an economics background. When government issues new debt it competes with the private sector for the funds available, thus crowding out private investment and economic growth. When it prints money it doesn't crowd out private investment. Huge different which explains the fact that inflation is still low.
ReplyDeleteMike Norman Economics, how about the growth rate?
ReplyDelete@Alfonso
ReplyDeleteThe only crowding out that can occur is for real resources. For example, if Uncle Sam competes for real resources that could of been used by the private sector then we could have crowding out in real terms.
Alfonso, your objection is based on their being a lump of money. That assumes an exogenous monetary system. We are currently operating with an endogenous monetary system in which the central bank ensures that there are always enough payment balances to accommodate credit desire, while maintaining the policy rate.
ReplyDelete