Mathematically Impossible To Pay off National Debt

[WilliamC]

Pay off the debt?

Never happen.

Hell I'm starting to believe we will never have a balanced budget again, so tell me when we actually stop adding to the debt?

Now if you include unfunded mandates as part of the 'debt' then I scoff at anyone who thinks the world economy can generate enough future wealth to somehow pay it off, it's absurd on it's face.

Hyperinflation or debt repudiation are the only two outcomes, in fact there will most certainly be both.

It's just a matter of time.

[AceNZ]

The article linked in the OP is badly flawed.

Every dollar gets borrowed into existence -- either borrowed by the Treasury or lent by banks. The only exception is when the Treasury directly creates money, rather than going through the Fed. It can be done, but it requires an act of Congress.

The National Debt -- the total amount of money owed by the Treasury -- forms the foundation of bank reserves, which in turn are the foundation for the credit money created by banks.

Paying down the National Debt actually requires removing money from circulation. In the process, bank reserves decline, and they are able to loan less. To completely pay off the National Debt, you would have to remove ALL money from circulation, including all credit money.

So, yes, paying off the debt isn't possible. With our current monetary system, it would also be suicidal. But it's not because there isn't enough money or because it's "mathematically impossible." It's because the entire money supply would have to vanish in order to succeed.

[GreatGoodRon]

By the credit card industry standards USA adminstration has to pay 30% or $30 Trillion interest every year.

So USA economy is suffering losses of $30 Trillion every year since they are not charged any interest for $100 Trillion debts.

[WilliamC]

Ron Paul has suggested repudiating the portion of the debt held by the FED on behalf of the US taxpayer.

Simply have congress pass a one-time single issue proclamation that this debt is hereby null and void since it is both held by the FED (which Congress can legislate to do things, including close) and owed to the Federal Government.

I don't know exactly how much this would be but it's a few trillion or so.

[Danke]

Hyperinflation or debt repudiation are the only two outcomes, in fact there will most certainly be both.

It's just a matter of time.

This. I might say high inflation instead of hyper.

[Zippyjuan]

We could cut government spending to $1 trillion next year and we would certainly pay off the debt in relatively short time.

Cut spending by $1 trillion and you almost balance the budget (using last year's figure of a $1.2 trillion debt). You are not reducing the debt until you are taking in more in taxes than you are spending. If you were to cut $2 trillion out of the $3 trillion budget (and no changes on taxes) you could pay it off in over 15 years (assuming that you continue to run a $1 trillion surplus every year for 15 years- like Congress is ever going to do that! They hate surplusses.)

Sorry- see you said "TO" a trillion- not "By" a trillion.

"Mandatory spending" like Social Security/ Medicare and interest on the debt are over $2 trillion. The "cutable" section is about $1.4 trillion (which would include everything for every department including the DOD). You could raise taxes by $1 trillion to go with $1 trillion in cuts. I know that won't be popular.

[Zippyjuan]

Ron Paul has suggested repudiating the portion of the debt held by the FED on behalf of the US taxpayer.

Simply have congress pass a one-time single issue proclamation that this debt is hereby null and void since it is both held by the FED (which Congress can legislate to do things, including close) and owed to the Federal Government.

I don't know exactly how much this would be but it's a few trillion or so.

The Fed currently has about $1.6 trilion of the US debt. http://www.federalreserve.gov/releases/h41/current/ That still leaves nearly $14 trillion.

[cubical]

"Mandatory spending" like Social Security/ Medicare and interest on the debt are over $2 trillion. The "cutable" section is about $1.4 trillion (which would include everything for every department including the DOD). You could raise taxes by $1 trillion to go with $1 trillion in cuts. I know that won't be popular.

Nothing is mandatory. Cuts would have to be made everywhere.

[awake]

Its always been a matter of who gets to get away with the loot and who gets to hold the bag. Like all Ponzi / Madoff schemes, The bag holders simply have not caught on yet.

Enron is not just Americas tragic happenstance, America is Enron. Just ask Greek bond holders who ripped them off? The central counterfieters are confirming it all with thier magical money machines.

[AceNZ]

Ron Paul has suggested repudiating the portion of the debt held by the FED on behalf of the US taxpayer.

Simply have congress pass a one-time single issue proclamation that this debt is hereby null and void since it is both held by the FED (which Congress can legislate to do things, including close) and owed to the Federal Government.

I don't know exactly how much this would be but it's a few trillion or so.

I support that idea, but it wouldn't help as much as some people think. The reason is that nearly all interest earned by the Fed is rebated back to the Treasury every year, less the Fed's expenses and their 6% dividend. So, the taxpayers would save by paying a lower dividend -- but the dividend is also a source of bank capital, which is still viewed as being in short supply due to ongoing bad loans, etc, so the odds of any sort of repudiation actually happening are minimal at this stage.