Why the money system is flawed and why the debt cannot be paid off even if they want to?

[Parker99]

So what?
You still haven't shown that the $20s in my wallet somehow have interest attached.

The problem is the debt is higher than the money in circulation.

 

[Toddsterpatriot]

The problem is the debt is higher than the money in circulation.

So what?

When I took out my first mortgage, my debt expanded 3000%.
And none of it involved currency. The seller didn't care.
I certainly didn't care.

Why do you care? And why is it a problem?

 

[Tom Paine 1949]

The OP seems to root itself in some strange ideas, and provide questionable MMT (Modern Monetary Theory) arguments to back up some really weird statements that even MMT theory, from what I’ve read, generally rejects. I think Toddsterpatriot is right in most of his comments here.

 

[expat_panama]

If everyone in the US is so rich, why isn't the number of homeless people decreasing and...

Whoa hold on! What we're talking about here (for better or worse) is AVERAGES. Parker99 keeps mentioning

...(Debt per citizen = $97,606 dollars)...

--which is arrived at by taking the total debt then dividing by the population. It's an average, and if we all want to go down that path we got to accept what we find. If we want to talk about all those homeless everywhere we look pouring out of all the buildings filling up all the roads --then let's also face the fact that the homeless won't have to pay a penny for the debt mainly because the don't have a penny for the debt.

Time to get a grip.

Most folks in the U.S. are NOT homeless. The U.S. is rich. The median household income in the U.S. is $75k. Compare that to the world's medium income of $11k. Also, remember that half the U.S. population gets even more than $75k and they're the one's who are paying off the national debt.

Problem solved.

 

[expat_panama]

You might first consider that $2T is debt that the gov't owes itself, debt that's not carried by an private person.

$7 trillion.

interesting & I won't dispute it. I got my $2T from the fed's data page that said the debt was $33T but the Gross debt was $31T, but your $7T sounds more reasonable. Either way that debt should be ignored.

 

[expat_panama]

...(Debt per citizen = $97,606 dollars)...

NEAT! That's the average I was just talking about above.

So, how do you like the fact that American all have $151T in the bank. That means (on average) every single man woman and child each has $458k in the bank for their very own.

Averages are FUN!

 

[Harpy Eagle]

NEAT! That's the average I was just talking about above.

So, how do you like the fact that American all have $151T in the bank. That means (on average) every single man woman and child each has $458k in the bank for their very own.

Averages are FUN!

One can have a lot of fun with averages. I think my favorite one I heard lately was that if Jeff Bezos went to a NFL game, him walking to stadium would raise the average net worth of even person by millions.

 

[Toddsterpatriot]

interesting & I won't dispute it. I got my $2T from the fed's data page that said the debt was $33T but the Gross debt was $31T, but your $7T sounds more reasonable. Either way that debt should be ignored.

Debt to the Penny | U.S. Treasury Fiscal Data

Debt to the Penny is the total debt of the U.S. government and is reported daily. It is made up of intragovernmental holdings and debt held by the public.

fiscaldata.treasury.gov

 

[expat_panama]

hey now that IS interesting, I remember that tally from way back but it would bring the actual debt that gov't owe others down to $27T. Comparing that to the private $151T answers a few questions. imho the whole question evaporates when we ask ourselves if we'd rather private individuals borrowed at high interest to support the gov't or do we want the gov't to just borrow it directly at low interest.

I vote low interest.

 

[expat_panama]

One can have a lot of fun with averages. I think my favorite one I heard lately was that if Jeff Bezos went to a NFL game, him walking to stadium would raise the average net worth of even person by millions.

Well said!

 

[Parker99]

interesting & I won't dispute it. I got my $2T from the fed's data page that said the debt was $33T but the Gross debt was $31T, but your $7T sounds more reasonable. Either way that debt should be ignored.

So how can the debt be paid if the debt is higher than the money in circulation?

 

[Tom Paine 1949]

So how can the debt be paid if the debt is higher than the money in circulation?

All debt is not paid at one time. The amount of money in circulation and its purchasing power and the velocity of circulation change. Even the very definition of “money” varies and is open to debate. For individuals, as for corporations, as for nations, historically “debt” owed or held as assets in actual fact does move up and down all the time, indebted nations do become lending nations and vice versa. Production of real capitalistically produced commodities, productivity gains & technological discoveries, discoveries and sales of natural resources, and resulting trade imbalances change the value of national fiat currencies. Debt can also be repudiated, written off & forgiven, the burden of debt can be reduced by inflation, capital can be destroyed, etc. etc.

Your static “analysis” and posing of this silly “conundrum” is imo … rather meaningless, even childish.

 

[Toddsterpatriot]

So how can the debt be paid if the debt is higher than the money in circulation?

Let's pretend the government debt is $33 trillion and the money in circulation is $1 trillion.
The government collects taxes and pays off $500 billion. Who got the $500 billion?

 

[expat_panama]

So how can the debt be paid if the debt is higher than the money in circulation?

There are no stupid questions, only stupid mistakes.

The money in circulation is one small part of the money supply because it it only the most liquid form --it's called M0 which includes coins and notes inacirculation along with other assets that are easily convertible into cash. The debt can also be paid off w/ the following other forms of money (from here):

• Notes and coins in bank vaults (vault cash)
• Federal Reserve Bank credit (required reserves and excess reserves not physically present in banks)
• Traveler's checks of non-bank issuers
• Demand deposits
• Other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts.
• Time deposits less than $100,000 and money-market deposit accounts for individuals
• Large time deposits, institutional money market funds, short-term repurchase and other larger liquid assets
• All money market funds

In addition money can be raised within seconds by selling easily trade-able assets.

The entire debt will be paid off by the time the longest maturity bond is redeemed. Sure, you can say most likely that more money will be borrowed keeping the total amount growing, but I see that as a good thing.

Am hoping that all this can help u out.

 

[Ringo]

 

[Woodznutz]

The problem is the debt is higher than the money in circulation.

The velocity of money takes care of that. Also, debt held or owned is an asset, not a liability, so while the national debt is a liability for the government it is an interest-bearing asset to those holding the debt. The interest paid on the debt is needed for the expansion of the economy.

That said the national debt can be reduced by infusing the economy with debt-free money. Easy peasy solution.

 

[Toddsterpatriot]

The velocity of money takes care of that. Also, debt held or owned is an asset, not a liability, so while the national debt is a liability for the government it is an interest-bearing asset to those holding the debt. The interest paid on the debt is needed for the expansion of the economy.

That said the national debt can be reduced by infusing the economy with debt-free money. Easy peasy solution.

Debt free money? Like the $20s in my wallet?

 

[Woodznutz]

Debt free money? Like the $20s in my wallet?

Not exactly, but close.

 

[Toddsterpatriot]

Sure. Once you've paid the tax on your income it's all debt free.

My $20s are debt free, whether I paid my taxes or not.

Are you saying we should "infuse the economy" with more Fed created money?

 

[Toddsterpatriot]

Not exactly, but close.

How close?