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

[Mexicano]

But the problem is worse than that because the money in circulation is debt. In other words the US government cannot pay off the debt because the money to lead it out is well way more.

It like you have $1 dollar bill and you come to be for $100 and I say okay but now you have to pay me $1000 for me giving you $100.

Now you must pay debt of $1000 with $100 I gave you and the $100 I give you is not your money.

In other words the US government cannot pay of the debt ever even if it spend not even dollar in a year.

Correct, the only way it can be paid off is by ensuring a country has a positive cash flow ( exports, remittances, foreign investment).
But that means the external debt of other countries is increasing, and of course, it can't grow forever.

The government debt is not a problem for a country that is the main reserve currency ( the money flows back into the central bank when other countries use it as reserves).

Private debt is more dangerous because when it deflates it creates a recession. The government is the only sector that can remain in negative financial equity permanently.

 

[Mexicano]

it is a matter of definition a principle of accounting. every liability is someone's asset.

Ok. But not every asset is a liability.

for the private sector to accumulate wealth, it must come from somewhere outside that sector, and the federal reserve has the only legal printing press.

Fed printing doesn't create wealth.

It creates financial wealth, and the same goes for the banking sector.
Most of the money we see is created by banks, not by the government.

 

[Toddsterpatriot]

It creates financial wealth, and the same goes for the banking sector.
Most of the money we see is created by banks, not by the government.

What creates wealth?

 

[Flopper]

Here's a thought.
Reduce Federal aid to states that have large budget surpluses.
Use the funds to retire debt.

Most States End Fiscal 2023 with a Budget Surplus as Revenues Exceed Forecasts

Shows a blog entry in detail

budgetblog.nasbo.org

That would not even come close to 34 trillion dollars in national debt.

If by some miracle the debt was gone tomorrow, we would just rebuild it. The problem is the public has become accustomed to the current level of government services and benefits, and nobody wants to give up what they already have. No one wants to pay more tax either. Whilst there are some government programs that some people would be happy to see cut, not too many people want to see cuts to big ticket items like social security, public schooling, roads, hospital, healthcare, policing, defense etc. Whenever governments try to cut back in these areas, there is public outrage and the current government runs the risk of getting kicked out at the next election.

 

[Woodznutz]

That would not even come close to 34 trillion dollars in national debt.

It would be a start.

It has to be remembered that the debtholders are in no hurry for repayment so there's no pressure on government to repay those debts, thus no real crisis.

 

[Parker99]

Why are people still debating here that money in circulation is debt? if money in circulation is debt than that 2 trillion dollars in circulation is debt?

 

[Woodznutz]

Why are people still debating here that money in circulation is debt? if money in circulation is debt than that 2 trillion dollars in circulation is debt?

Actually, it is.

 

[Toddsterpatriot]

Why are people still debating here that money in circulation is debt? if money in circulation is debt than that 2 trillion dollars in circulation is debt?

My $20s aren't debt. Are yours?

 

[Ringo]

 

[Toddsterpatriot]

Which billionaires are sleeping on their money?

 

[Flopper]

It would be a start.

It has to be remembered that the debtholders are in no hurry for repayment so there's no pressure on government to repay those debts, thus no real crisis.

That is true and since there is no crisis, there is not going to be any significant change. The fact is republicans are not really interested in paying off the debt because of the political fallout it would cause and democrats of course have no such interest. Only one year in this century, 2001 have we had a surplus.

 

[Woodznutz]

That is true and since there is no crisis, there is not going to be any significant change. The fact is republicans are not really interested in paying off the debt because of the political fallout it would cause and democrats of course have no such interest. Only one year in this century, 2001 have we had a surplus.

The only way a surplus can reduce debt is to 'call' certain loans. However, the mechanism for calling must be triggered and the particular note must be callable. Otherwise, it's just more money that the government can spend at will.

 

[Toddsterpatriot]

The only way a surplus can reduce debt is to 'call' certain loans. However, the mechanism for calling must be triggered and the particular note must be callable. Otherwise, it's just more money that the government can spend at will.

A surplus reduces the debt because maturing debt doesn't have to be rolled over.
No 'call' is needed.

 

[Woodznutz]

A surplus reduces the debt because maturing debt doesn't have to be rolled over.
No 'call' is needed.

The debt is not only rolled over but increases. Why wouldn't someone roll a 3 percent bond into a 5.6 percent bond. You would think the prospect of higher government debt through higher interest rates would cool down government borrowing, but it doesn't. Then there's the debt ceiling that is always raised. It's like a family that's deeply in debt raising their budget and having to borrow to meet it.

 

[Toddsterpatriot]

The debt is not only rolled over but increases. Why wouldn't someone roll a 3 percent bond into a 5.6 percent bond. You would think the prospect of higher government debt through higher interest rates would cool down government borrowing, but it doesn't. Then there's the debt ceiling that is always raised. It's like a family that's deeply in debt raising their budget and having to borrow to meet it.

The debt is not only rolled over but increases.

If there is a surplus, instead of paying for maturing bonds by selling extra bonds,
you could sell fewer bonds.

Why wouldn't someone roll a 3 percent bond into a 5.6 percent bond.

You're confusing the issue.

You would think the prospect of higher government debt through higher interest rates would cool down government borrowing, but it doesn't.

I wouldn't think that.

 

[Flopper]

The only way a surplus can reduce debt is to 'call' certain loans. However, the mechanism for calling must be triggered and the particular note must be callable. Otherwise, it's just more money that the government can spend at will.

Treasury bonds and Treasury notes are in general non-callable which is where almost all the debt is.

 

[Natural Citizen]

But the problem is worse than that because the money in circulation is debt. In other words the US government cannot pay off the debt because the money to lead it out is well way more.

It like you have $1 dollar bill and you come to be for $100 and I say okay but now you have to pay me $1000 for me giving you $100.

Now you must pay debt of $1000 with $100 I gave you and the $100 I give you is not your money.

In other words the US government cannot pay of the debt ever even if it spend not even dollar in a year.

There is always more debt in the system than there is 'currency' in existence to pay the debt. That's what makes the entire system finite.

 

[Natural Citizen]

This thread is a disaster. lolol....

 

[Natural Citizen]

Creating money from thin air to spend into the economy does add more money to the economy.

Thin air is not a store of value.

Therefore it is not ''money.''

 

[Natural Citizen]

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.

All of that word salad an you didn't even support it by sharing with us your yardstick for defining unit of account.