Could the Congress, under the Constitution’s grant to it of the power to coin money, create coins of any (including very large denominations) without issuing bonds, bills or notes that require taxpayers to pay not only principal but interest? If so, couldn’t Congress simply create these coins and pay them to holders of Treasuries to pay off the national debt? The Treasury would then VOID the bonds. The Treasury department has once in a while redeemed Treasury bonds early. Wouldn’t America be better off if our foreign creditors like China and Japan were stuck with our currency rather than interest paying bonds? After all they aren’t going to come here and buy our consumer goods. Should we care if they buy AIG, Citi, etc. that speculate, reward executives only, harm their own stockholders and don’t comply with the request that they lend to start recovery?
Hey, that sounds like a plan that’s working out well for Zimbabwe…
In all seriousness, simply defaulting on our debt in a straightforward fashion would likely prove less disastrous to the American and world economy as well as our future ability to lend money in overseas markets.
I believe that the largest portion of the national debt is held by Americans.
Technically, the biggest debt-holder is the US government itself, including Fed holdings in that calculation. Foreign governments are in second.
Yes. They’d have to undo the Federal Reserve System, but an act of Congress made the Fed, and an act of Congress could unmake it.
Yes, this is also possible.
Jesus fuck, no.
The world economy is not a zero sum game, alright? We do not magically become richer if we print a bunch of worthless paper to pay off our debt obligations. We become richer by working together, and a big part of working together is keeping our damn promises. When they lent us a bunch of dollars, the dollar was valuable. When we pay off the money lent to us, we need to pay them back with dollars of roughly equal value.
If we paid them back with cheapo dollars hot off the printing presses, it would crash our currency, our trade relationships, our economy, the world economy, and possibly also civilization as we know it. This is known in the economics profession as “A Bad Idea”.
How is your proposal different than, say, printing a billion dollars worth of currency for every man, woman, and child in America, and BAM! Everyone’s rich! ?
Printing all that money would have zero impact.
Putting it into circulation would cause a monkeyscrew.