Like most Americans, you have a shallow understanding of our money and how the various sections of our economy react to it. This is anything but your fault, so don’t take that as derogatory toward you in particular. You assume the world works like your budgeting process because “wise stewardship” has been drilled into you for so long that you just adapted to it. From the time we get our first allowance we are taught that we must obtain money from some source before we can spend it. You also kiss your money goodbye when you make purchases after earning it.
However, this is only true for entities that aren’t our federal government, as the creation of the currency, the US dollar, is a monopoly patent that the Constitution grants to our Congress. It makes no promise of that currency except to accept it in payment of federal taxes and fees, so “debt” is entirely a misnomer. Congress also has the authority to levy taxes, but it can never collect those levies until it has created/spent more into the private sector than it taxes back. A currency must be usable as a store of value to be widely accepted beyond merely paying imposed taxation. Otherwise, the people soon figure out that the government is stealing resources from them, leaving nothing of value behind after taxes.
Because taxing and borrowing depend upon this spending to make either possible it can be said that spending “funds” both, not the other way around. It is only when we view the government as a competing “user” of the currency that we assume that we are somehow harmed by its spending. The opposite is true, as every dollar the government creates by spending goes to someone to become their “asset” in the private sector. The national debt is nothing more than a fairly accurate record of the private sector “NET” money supply. The red ink of the government is the black ink of the economy and our national “savings” in Treasury bonds.
With a fiat currency and debt only denominated in its own currency the government can never become involuntarily insolvent or fail to pay any obligation also denominated in that currency. This has limits, but they aren’t related to any arbitrary number. The limits to money creation are defined in real resources that are available for the currency to purchase. Only when the economy is running at its maximum and employment is at 100% would inflation become a factor. Markets will always increase production to capture demand (money) before raising prices. Scarcities in the markets and supply chain hiccups will cause individual prices to rise as dollars bid them up, but that would occur at any level of money supply and is not “monetary inflation”.
The exclusive patent on money creation gives Congress a no-cost commodity that can shape the economy and we can “afford” anything physically available. This makes any degree of misery that can be mitigated with spending strictly a political decision, not economics. People are literally dying because Congress and the voters refuse to save them. This is not the description of “freedom” or prosperity that I have ever seen and it is promoted purposefully when any politician or media mistakes taxation/borrowing as revenue for the government that neither needs nor uses revenue. Both are simply inflation control, but borrowing is totally useless as a way to increase the money supply and is mostly just welfare for banks and deep pocket investors.
Is $22 Trillion too much money to have in our economy? We can have that discussion, and we should. However, that would have to include distribution and excessive wealth accumulation. That is why America has been misled into the most severe case of mega number phobia in history. Please take note that no one ever asks “how will we pay for it?” when discussing the totally absurd military budget or disaster relief.
We can “pay for” Medicare for all the same way we pay for anything, with Congressional appropriations of new money, even without increasing taxes or borrowing. If it costs less we may have to deal with decreased economic activity, especially in the transition when insurance workers will need new jobs. That won’t happen as long as we maintain our wrong-headed gold standard thinking about our money and try to pay for spending by removing previous spending from the economy.
