55% of the US National Debt Is the Result of Repaying Debt with More Debt

Re:55% of the US National Debt Is the Result of Repaying Deb... by JumpCrisscross on Thursday July 19, 2018 @10:27AM (#17566574)

> This is an inevitable consequence of basing the money supply on debt

Not really. The U.S. government ran surpluses in the nineties. This led to hand-wringing as banks imagined a world without Treasuries, which would make collateralisation quite complicated. (We had the same "not enough safe assets" conversation after the financial crisis.)

The U.S. government could wipe out its debt. The Federal Reserve couldn't, as every dollar bill is technically a Federal Reserve note, but that's a different beast.

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Re:55% of the US National Debt Is the Result of Repaying Deb... by teslabox on Thursday July 19, 2018 @10:38AM (#17566683)

I'm saying that under the Federal Reserve system, the total indebtedness of the U.S. economy must always increase. If the government starts to pay off its debt, the private sector must increase its debt levels. If the economy doesn't keep borrowing money, the money supply would rapidly collapse, leading to a deflationary spiral.

The only money that never has to be paid back are coins.

Do you have an alternate understanding of our monetary system?

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