US Debt is $30 Trillion Dollars, Rising, On Track to Ruin the Lives of the Next Generation of Americans

Big scary number!! Everyone, hide under your bed!!

The national debt is an aggregate of yearly deficits since the founding of our nation. A deficit is a difference between what is collected in taxation and fees and what Congress spends in a fiscal year. This number is represented by Treasury instruments that accrue interest that is established by the Federal Reserve.

However, those instruments cannot be a "funding" mechanism for the currency issuer, as the funds to purchase them must already exist in the banking system. They are simply an asset swap purposed to draw down reserves within the system and provide an incentive to save while also allowing the Fed to manipulate the base interest rate in the secondary bond market.

Once one understands the macroecon of our monetary system it becomes obvious that taxation and borrowing cannot "fund" our federal government's spending, as both require existing reserves in the system. It is that spending which funds both operations, not the other way around.

Such an understanding also reveals that the national debt is a misnomer as it is commonly used and actually represents the current money supply in the economy and any foreign holdings of US dollars. There is no finite "bucket of dollars" that Congress must draw from to enable its spending, limiting that available to the private sector. The sovereign currency-issuing federal government has an infinite number of dollars and can afford anything that it can resource denominated in dollars.

It never needs its own dollars back to spend and can never become insolvent. Taxation and bond revenue are both simply currency/reserve drains and all spending is new currency creation. The private sector cannot be responsible for "paying" the national debt as doing so would destroy all money in the system and cause all private sector bank debt to go into default.