Letter: National debt not money US gov't owes; it's dollars non-government owns

Contrary to conventional wisdom, the U.S. government does not spend "taxpayer" money. The federal government creates all U.S. dollars by spending them into existence, including those with which we pay taxes, and it destroys U.S. dollars by taxing.

Dollars that it does not tax back in a fiscal year are called the "deficit" and those are the dollars we the people get to keep. Balancing the federal budget each year would offset federal spending with an equal amount of taxing, leaving the American people with net zero new U.S. dollars. If you can finance your life without U.S. dollars, then fine. Otherwise, a balanced budget will ruin both you and the economy.

Because the government creates dollars, it does not borrow them. Thus, it has no "borrowing" debt as we think of it. The so-called national debt is untaxed U.S. dollars that individuals, companies, countries and even the Federal Reserve have parked out of circulation into treasury securities accounts at the Federal Reserve.

Those accounts are time-limited safe and secure savings accounts, and the Treasury always redeems them upon expiration. Consequently, there is no "paying down" the so-called national debt. In fact, the U.S. Treasury redeemed over $140 trillion in so-called national debt in the current fiscal year alone while accommodating even more.

To make the big, scary "debt" number disappear, the government could stop offering treasury securities, or it could transfer all the current securities back to their owners' private bank accounts, or it could tax all those dollars out of existence. In any event, the national debt is not money the government "owes"; it is U.S. dollars the non-government "owns."

JIM GADDIS

Greenville