The national debt exists today because when the nation went off the Gold Standard in 1971 and adopted its present non-convertible fiat currency system, Congress did not repeal its mandate requiring that the Government back all its deficit spending with already existing borrowed dollars whose convertibility was covered by our holdings of Gold. This Congressional mandate to borrow funds by issuing debt instruments, has caused the national debt to persist. Had Congress repealed it when President Nixon took the country off the Gold Standard, and had we ceased to issue debt at that time, then the Government would have re-paid all of our 1971 debts as they came due, and our national debt today, as well as our debt-to-GDP would both now be at Zero. So, the existence of the National Debt today is Congress’s fault!
The national debt is a political problem created by Congress’s inaction. It magnifies the political strength of conservatives and weakens progressives because it makes people afraid to deficit spend, since then the country will be “increasing its debt,” and increasing “the burden on our grandchildren.”
Congress needs to repeal the mandate forcing the Government to issue debt instruments on a dollar for dollar basis with deficit spending, right now.
Both Congressmen and Senators should quit their whining and grousing about deficits and the national debt, since it is their lack of action that is translating deficit spending into more public debt. It doesn’t have to be that way. As the creator of its own currency, the United States can just spend without issuing debt, and that new spending can include paying off its outstanding Treasury Bonds as they come due until that national debt is gone.
The United States has many very real problems. But the national debt is not one of them. The deficit spending required to solve our problems shouldn’t be constrained by that fantasy problem, or the fantasy solution of stabilizing a debt-to-GDP ratio. To make sure that it’s not, Congress needs to repeal its debt issuance mandate now, before the American people learn that Congress, itself, is responsible for its existence, and that they are the ones to blame for both the debt and their own phony deficit hysteria.
(Cross-posted at FireDogLake and Fiscal Sustainability).
