The press and irresponsible market professionals get this wrong all the time, and it betrays a terrifying ignorance of how our financial system actually works.
Your have that right, but it isn't by accident or incompetence. As long as people can be convinced that their government functions as they do, having to "get' money from somewhere, collected or borrowed, to enable spending they will mistrust their government's ability to act in their best interest and resist most benefits they could be receiving.
Privatizing the things most other governments provide as their part in the social contract creates markets where none are required or beneficial. This is the playbook for neoliberalism.
Only private commercial banks create money when they lend out reserves.
Those reserves only serve to enable interbank transfers and set rates for lending. The principle of loans are balanced by the creditworthyness of the borrower and their contract to repay. As that principle is reduced the reserves of the lender are also retired until the loan is paid off. This process decreases the interest obligation of the lender and the money supply.
Dollar bills have absolutely no value except in our collective imagination, but everybody believes in the dollar bill.”
This isn't true. The monopoly issuer of the US dollar is also the primary taxing authority that only accepts payment denominated in the currency it creates at will. Taxes drive demand for currencies and are somewhat of a price stabilizer as the dollar will always pay one dollar of tax obligation.
As long as a currency issuer can collect taxes, and spends more than it taxes back to satisfy the desire to net save and retire private debt, it can force the private sector to provision it without it having a revenue stream. It makes everyone unemployed in the denomination of the tax until the obligation is settled.
Technically, all money is debt.
This is true, but fiat currencies are not the same as other types of debt. They are self funding, so borrowing isn't a funding mechanism and only serves to satisfy the desire to net save as well as anchor interest rates in the private sector.
Taxes are similarly not revenue and destroy currency, balancing it against the debt that created it, not fund anything. There is no "infinite+1" that makes Congress any more capable of creating currency when it collects taxes. Taxes serve several purposes, but none of those are "funding" of spending.
Each dollar created and spent into the private sector in excess of taxation becomes someone's monetary asset, so the balance in the whole economy is zero sum and the debt is nothing more than a record of the net money supply. It is the store of value for all commerce with our government in the private sector, not an encumbrance on future productivity.
If we foolishly attempt to "pay" this debt and collect more in taxation than the government spends we can only damage the monetary position of the private sector and create defaults in the banking sector. This has been shown to be true over the last seven times it has been attempted as depressions and recessions followed closely behind.
