National Debt Awareness Center often receives opposing views about whether this is bad or about its impact on our economy. The following view is submitted by Mr. Rodger Mitchell.
The facts are:
1) To understand the economy, we must learn from history. Annual percentage increases in Total (federal and private) Debt parallel annual percentage increases in GDP. In short, the more debt, the healthier the economy. The reason: Debt = money. You may object, "If I have debt, I don't have money. But the word "have" is semantically misleading. When you owe money, it's the creditor who has the debt/money. Your note to the creditor is money in his pocket.
2) The government has the unlimited ability to produce money. Therefore, the
government does not need tax money. Taxes destroy money, which means all taxes
have a negative affect on all of us.
3) Contrary to common knowledge, "turning on the money printing presses" never has caused inflation. But it always has caused economic growth.
4) FICA could be eliminated and Social Security benefits could double, and still Social Security would not go bankrupt. Same for Medicare. They are federal agencies, and no federal agency can go bankrupt. (But imagine the tremendous boost our economy would receive by eliminating FICA ).
5) High interest rates do not "cool" the economy, nor do low rates stimulate. To a small degree, the reverse is true, because high rates force the government to pump more money into the economy.
6) Federal debt is an economic asset. The economy is the creditor, and for a
creditor, debt is an asset. The federal deficit is an economic surplus. This
means the economy receives more money from the government than it sends to the
government -- a surplus. So why do your readers prefer an economic deficit
7) A growing economy requires a growing supply of money. Economic growth is
impossible without growth in Total Debt (money). So here's the question, I will bet not a single one of your readers will "remember" to answer: Where will the money come from to grow our economy?
Rodger Malcolm Mitchell
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Director of the National Debt Awareness Center comments: OK, try doing this on your personal budget!
Rodger Malcolm Mitchell responds:
Therein lies the problem: The belief that personal debt can be equated to federal debt. It can't. The federal government never has and never will run out of money. It creates money at will.
Look at the evidence. The federal deficit has increased enormously. Are you paying for it? No. You don't owe it. The federal government owes it.
You are not the federal government.
Unlike the federal government, you don't collect taxes. You pay taxes.
Unlike the federal government, you cannot create
Unlike the federal government, you can go bankrupt.
Any time someone equates the federal budget with your personal budget ("I don't go deeply into debt; neither should the government."), you know they have no understanding of economics.
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Medicare: A Solution to the Problem
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US Federal Debt is $9 Trillion!
Because all money is debt, and a growing economy requires a growing supply of debt, this is what happens when debt is reduced:
U. S. Federal Debt reduced 29%. Depression began 1819.
U. S. Federal Debt reduced 99%. Depression began 1837.
U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
U. S. Federal Debt reduced 57%. Depression began 1893.
U. S. Federal Debt reduced 36%. Depression began 1929.
1998-2001: U. S. Federal Debt reduced 9%. Recession began 2001