For college level minds only (long words): can you find the flaw in this logic?

Q: Is our so-called “national debt” a real debt, an interest-bearing burden that we must repay?

A: No, It lacks the two essential qualities of a real debt. It’s a “Debt In Name Only”, a “DINO” -

1. A real debt is a serious burden. Our DINO is not now and never will be a serious burden for taxpayers.

Our DINO is the total value of all issued and still maturing treasuries. Who pays for the redemption of mature bonds? It’s not the taxpayers! It’s the buyers of newly-issued treasuries who pay for the redemption of mature treasuries. It’s equivalent to a simple bond rollover done every day by bond-owners. In every auction, more treasuries are demanded than are available from the supply of new issues. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed could even create an artificial demand for treasuries by buying them in the open market with a few keystrokes. Where’s the awful burden?

Our Treasury does not borrow money like a home-buyer getting a mortgage. It is rather a custodian of funds, like a bank accepting money offered for certificates of deposit. While a bank with too many bad loans can certainly have too many maturing CDs, our non-lending, fiat Treasury cannot have too many maturing bonds unless its deficit spending is causing harmful inflation. And that happens ONLY in a war or emergency requiring rationing. It NEVER happens during a recession. During prosperity, banks are ALWAYS the sole cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, don’t restrict infrastructure spending for the future! Regulate the banks!

The Treasury auctions bonds only because Congress requires that the proceeds finance the annual budget deficit. This requirement, now a relic of the former gold standard regime, was suspended during World War II, followed by 35 years of strong economic growth without harmful inflation. Now, under our fiat currency regime, Congress can again, without auctions, finance deficits out of thin air, the same way your corner bank financed your home mortgage.

Crying that our DINO is unsustainable, Wall Street scammers have panicked the public and many ignorant journalists and politicians, in Congress and in the White House. It’s a hoax meant to yield a fortune in commissions by privatizing Social Security and Medicare. And, bribing Congress into austerity, the Wall Street con artists are nursing a huge army of unemployed labor that prevents the middle class from bargaining for better wages. As our rotting infrastructure renders our industry incompetent, it is that growing army of the idle that will become unsustainable.

2. A real debt must be repaid. Our DINO will never be repaid and should never be repaid.

Only a federal budget surplus can reduce DINO. Since dropping the gold standard in1971, we have rarely had even a modest budget surplus. None is now in sight. To supply enough treasuries, the ONLY risk-free instrument used for trade collateral, insurance, pensions, bank reserves, etc., our Dino must continue to grow along with our economy. In fact, deflation and then depression will hit us hard unless big budget deficits replace the cash now flowing into China.

Q: Won’t we need higher tax rates to pay for infrastructure?

A: Congress does not use or need our taxes for spending. The IRS repossesses enough federal spending to prevent harmful inflation and then destroys every cent of it. (Cash payments are shred and the pulp is sold). For spending, Congress creates new money out of thin air, deposits it in the Treasury, writes checks, and makes the Treasury auction bonds to finance the deficit, which is limited only by Congress and not by the availability of tax revenue.

Every spent federal dollar not repossessed by the IRS is saved by the private sector. Our annual budget deficit is exactly equal to the annual increase in private sector savings. YES! DEFICITS = SAVINGS! No deficits, no savings! A tax deficit is a savings surplus. It is money left on the table for the savers by Uncle Sam because he didn’t need it to prevent harmful inflation and because consumers need it to consume. We do not have a “national debt”. We have a “national savings”. The bad “Debt Clock” is really the good “Savings Clock”. How can we have too much savings?

Since bank loans must be repaid with interest and hard cash is moving to China, budget deficits (surpluses!) are the ONLY savings source that can sustain our economy. We need to DOUBLE our DINO / savings to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation, even with very high tax rates. Our (DINO + total bank deposits) / GDP ratio is less than half of the comparable figure for China. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one quarter of Hong Kong’s ratio. Too much savings?