What The Politicians Don’t Want You To Know About The National Debt

http://www.epinions.com/content_3514867844 ^ | 09-19-03 | Matthew Nehrling

[mnehring]

The truth about the national debt. This is the article that has been buzzing around the net for the past few days.

http://www.epinions.com/content_3514867844

... Any discussion I have ever had about the national debt I have always started my position by asking the other person who they think the creditor is on the debt and who really owes the debt. Most people, at first instinct say that we are the debtors who have to pay off the government and each of us carries the burden of the national debt.
This is the first, and most important fallacy to understanding what the national debt is and how it works. Politicians have long made the populous believe that they are the ones who owe the national debt, however, they never have clarified why or how. This has kept the general population in fear of the national debt and always giving power to those who promise to eliminate the national debt.
The truth is that the debtor is actually the government, not you. If the government is the debtor, who is the creditor? Most people would be surprised to realize that you are the creditor on the national debt. The money owed on the national debt is actually owed by the government to the populous. Keeping a running national debt means that the government owes its citizens, not the other way around. The politicians never want you to learn this because they don’t want you to realize that the government owes you....

[JohnGalt]

"If the government kept a ‘rainy day fund’ as so many politicians suggest, then not only would we remove money from the economic cycle but we also would not need to issue bonds to fund the recovery from a disaster..."


When the DC tax regime collects a tax or prints $100 billion to sell on the open market, value is removed from the free market place. This author is a phony apologist for a decrepit tax regime.

[Stirner]

The author basically claims that the national debt is owed to the population ef the U.S. and that, therefore, the bigger it is the better because that just means each of us is owed more. This is fallacious because the main premise is wrong: the debt is not owed to the people of the U.S. as a whole, but to whoever lends the money to the government, the bondholders. The lenders need not reside in this country, and many of them do not. Those of us here who do own government debt are a small fraction of everybody who lives here.

[revtown]

Another lie about the debt is that there has been recent budget surpluses. This gov web site shows there hasn't been a surplus in 40+ years. We came close in in the 90's but no cigar. I wish people would quit giving Clinton credit for having a surplus, he lies about that too.

http://www.publicdebt.treas.gov/opd/opdpenny.htm

[mnehring]

The author (me) actually is no apologist for any tax regime and is a strong supporter of a flat tax system. Based purly on economics, however, and the system we currently have, the issuance of government bonds is one of the best ways to keep the valuation of the dollar stable duing trying times.

One cannot separate taxes or the Federal Reserve from any discussion of the US Economy because, like it or not, they are directly tied to the economic system of this country.

Is this ideal, probably not. But it is reality.

[Izzy Dunne]

owed by the government to the populous.

Lost me right there. Someone who doesn't know the difference between "populous" and "populace" doesn't get MY attention.

[mnehring]

Bigger is not better, nor is that stated. What is stated in the article is the ideal situation would be a state of equilibrium. The point is that the debt is not a burden that is put on the shoulders of the American taxpayer but is an actual component of the US economy.

[undeniable logic]

Exactly, the gov't owes the creditors money, but how does the gov't get the money that it owes to its creditors? Through taxes... In order to payoff creditors it has to collect more money then it spends. A taxpayer may send $5k to the gov't, with $4.5k in services granted and $0.5k going to payoff debt. During debt accumulation, we are getting more services then we pay for. During debt payback, we are getting less services then we pay for.

I would tend to argue that in any case, we are getting less then we pay for, no matter how much deficit spending there is. Gov't inefficiences and all...

[JohnGalt]

f the income tax was abolished tomorrow, the gubmint would have to reduce itself to the narrow size of his 1987 waist line--now was that a small government?

I agree with you that the debt is a myth; the government owns 33% of the land and need only sell its assets to get the books to come out right but they much prefer the phony argument over whether to tax the citizens at 47% and print the other 2% or tax us at 49% and print a little less.

Sell the government assets, issue bonds to the debt holders in the Social Security system and defund the whole phony operation. The flat-tax maybe a compromise with Leviathan that I could support, but there is no need assume that your audience, particularly on a conservative web site believe the federalis have earned one penny of

[mnehring]

My typo,
Sorry,
The article actually has it correct.

[mnehring]

From the article: Does this mean that a bigger debt is better? No, the national debt is a key component of our economy but the most ideal situation would be a state of equilibrium with as little outside influence as possible. The reality of the national economy has, however, created a cycle where much of our investments and capital is hedged by the issuance of treasury bonds.

[jd777]

Pathetic. The article says the u.s. debt is owed to the the american people. That would be true only if these people own U.S. treasury bonds. Period. The U.S. Public debt is owed to the holders of those U.S. Treasury bonds. Nobody else. The government has to make interest payments on it's 6.7 trillion dollar public debt. You would know if the debt is owed to you, you would have received an interest payment.

Now the worst part of this is that the author claims our debt is owed to the "american people". Don't you feel richer already? What this nut job doesn't mention is that 40% of the U.S. treasury bonds are held by foreign investors and institutions. those are not american people. They might be very nice. But they ain't american. Basically, this author is either misinformed or he is a liar.

[mnehring]

The article says the u.s. debt is owed to the the american people. That would be true only if these people own U.S. treasury bonds. Period. The U.S. Public debt is owed to the holders of those U.S. Treasury bonds Where do you think that banks, companies, and other investments hedge much of their capital? Like it or not we are all tied to T-Bonds than you realize. T-Bonds provide short and long term stability to most of our employers. T-Bonds keep the US dollar strong against a ever-changing world-wide economy. Don't agree, most economists will tell you that the recent slip in the dollar is due to the EU offering an alternative to the US T-Bond that has not been seen before. It shows how closely our economy has been tied to T-Bonds.

[glowworm]

The whole fallacy of the balance of the debt is that the "we" that indebits and takes is not the "we" that will pay. It is a theft from those who follow as future tax payers to pay for "services" spent for others.

And selling US assets is stupid beyond belief.. It is a loss of US wealth that will affect future generations and turn them into virtual economic slaves..

[mnehring]

What this nut job doesn't mention is that 40% of the U.S. treasury bonds are held by foreign investors and institutions. And this is bad? What this means is that the world realizes that the US economy is the safest place to hedge your capital. This gives the world a vested interest in the strength of the US economy. This also gives the US economy a way to gain capital with out having to pass all the burden on to the taxpayers. The world is vested in us, thus they should, and do invest in the betterment of the US. The lefties are wrong whey they say that we need the rest of the world, in reality, the world needs us.

[Orangedog]

"thought-you-might-need-a-good-laugh" ping!

[Orangedog]

T-Bonds keep the US dollar strong against a ever-changing world-wide economy.

Yeah, they've done wonders against the euro lately. [/sarcasm]

[Kevin Curry]

The lenders need not reside in this country, and many of them do not.

E.g., the Japanese.

[Willie Green]

Lost me right there. Someone who doesn't know the difference between "populous" and "populace" doesn't get MY attention.

Besides that, it's an intentionally misleading pile of Hooey.

A growing portion of our National Debt is owed to foreign nations.
They purchase Treasury Securities using money they obtain from the record Trade Deficits that we continuously incur.
And with 18% of federal revenues going to simply service the interest on our National Debt, that means that a growing portion of our taxes is going into the coffers of foreign governments instead of our own government.

"Think what you do when you run into debt;
you give another power over your liberty."

-- Benjamin Franklin (1706 - 1790)

[.cnI redruM]

Here's a constructive discussion. If the current national debt is too high, there are two ways to fix this problem.

1) Raise more revenue.

2) Spend less $$$

Given that as a premise. List what should be taxed more, or what programs need to go out of existance.

Personally, We start by eviscerating, the Dept of Ed, The Dept of Agriculture, NPR, the NEH and the NEA. Also, Medicare, Medicaid, social security and any future Prescription Drug Panderation Act all need to be means tested. The US should also means test foreign aid and not write checks to any country who is A) Not consistently pro-US or B)In the top 1/3 of world GDP.

These basic cuts would get us in the ballpark of $500 bil without a single change to our current tax code.