In our current debt-based monetary system, we're never going to pay off the national debt.
This article will explain what the debt is, why we can never pay it, and the elegant and obvious solution proposed by Nobel Prize winning economist, Milton Friedman. Please read and understand this crucial information for your responsible citizenry. You literally have nothing more valuable to do.
The US national debt is approaching $12 TRILLION dollars. Of that amount, about 2/3 is owed to whomever among the public purchased US government debt securities (bills up to one year, notes from two to ten years, and bonds of 20 and 30 years) and 1/3 is intragovernmental transfers (US government agency purchases like Social Security surplus and other retirement funds). China and Japan hold about $750 and $650 billion, respectfully.
The reason we have a national debt is because our government "leadership" surrendered to the banking system its power to create money directly for the payment of public goods and services through the Federal Reserve Act and fractional reserve banking. The cost of this transfer is ~$1 trillion every year to the American public. But don't worry. The banks are doing a great job with the responsibility; that's why we collectively bailed them out with up to $12 trillion of our collective money from addictive gambling losses with no change in regulation. But back to our story of national debt.
We won't and can't pay $12 trillion because it's too much money. The population of the US is ~300 million, dispersed among ~100 million households. That means the average household would have to pay $120,000 each. Given the average annual household income is $50,000, your share would vary proportionally. The national debt doesn't include TOTAL US debt, which is ~$70 trillion. These numbers explain why our monetary system is called "debt-based."
The interest payment on this debt last year was $450 billion. That's ~$4,500 for the average household with $50,000 income, with your share varying. If your household earns $133,000, you're paying $1,000 every month on interest to the national debt. This is similar to the US choosing to pay only the interest on a credit card, then borrowing even more money to make the minimum payment on the principal while ever-increasing the total debt.
This debt-based monetary system is a Robber Baron-era structure created by banking oligarchs for their own benefit, not for the American public. The insanity of perpetuating such a system was well-expressed by Wright Patman, Representative in the U.S. Congress from 1929 to his death on March 7, 1976, and Chair of the House Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913. This quote is from excerpts of September 29, 1941, as reported in the Congressional Record of the House of Representatives (pages 7582-7583):
“When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money... The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks. I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.”
Here is the elegantly simple and obvious solution: because a nation's government has the power to create money, do so. Instead of rolling-over the national debt as its individual securities come due and are redeemed (paying them by additional borrowing), just pay them with government created money. To avoid inflation, concurrently restrict the banking industry's fractional reserve power to inflate this money through lending by increasing their reserve requirement proportionally. The reserve requirement is the percentage of deposits they cannot create credit from when someone asks for a loan. This ends the debt while maintaining the money supply. The 8-minute video below will explain.
To maintain American's access to credit, we have three basic choices. One is privately-owned banks that lend long-term deposits directly and make fractional reserve banking and its multiplier effect illegal (see my brief for full explanation). The investors who purchased government securities will invest to meet lending demand because its a similar investment to government securities. Two: have a government-owned banking system, like how we manage fire departments on geographic need. The argument for this system is American's minimal borrowing costs and that the creation of credit is relatively simple. The advantage of non-profit lending rates would be mortgages of less than 1% interest. Three: a hybrid of private lending with perhaps government-sponsored 1% mortgages. BTW, current mortgages usually double the cost of buying a home, as you probably know. Given a choice, the public would prefer non-profit lending.
Many of our brightest historical minds have understood the insanity of a national debt and the obvious answer of government-created money rather than bank-created credit, from the writings of Benjamin Franklin and our Founding Fathers to Thomas Edison and today's members of Congress, notably Dennis Kucinich and Ron Paul.
The following 8-minute video from The Money Masters gets to the heart of this solution; I recommend the entire 3.5 hours of viewing and the video at the end of my brief, Money as Debt II: Promises unleashed.
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