There actually is no public debt...or is there?

Critique this article and chart therein, which compares public assets to public debt and suggests that the usual way to state a debt load is to compare assets to debt and come up with a net figure.

Using values for public assets and public debt, the US actually ends up with a positive number.

Posting this because it seems too simple and I want to watch the debate.

There clearly is a debt. We owe money and we’ll have to pay it. So I think the question you’re asking is whether it’s a payable debt - and the answer is it is.

Yes, there is public debt. Being in debt doesn’t mean having a net worth below zero, it means owing a debt to someone or something.

I think it is a dumb argument. National debt isn’t anything like a home mortgage. For one thing, people actually expect to pay off their mortgages and the balance goes down over time. The U.S. national debt is growing very quickly and the best hope in the medium term isn’t that it will start decreasing, it is that it will simply grow less quickly.

The other reason it is a bad comparison is that home mortgages are backed by an asset (the home itself) that tends to appreciate in value and can be sold to pay off the mortgage and possibly provide some profit if the owner needs to. The article claims the same is true for the country as a whole but it isn’t. We can’t just sell off most U.S. assets to pay off the National debt. What are we going to do, unload Hawaii to the Japanese and California to China if we get into a really bad pinch? What about the U.S. Interstate highway system? That must be really valuable. Who can we sell that to?

Like Nemo said, you can be of positive net worth and still have debt.

What the article doesn’t mention is whether the income generated by the “public assets*” is capable of sustaining interest payments (and hopefully) principal payments. So, big fail there.

*Defined as what, exactly?

I agree that it’s a dumb argument, but your examples aren’t that crazy. We could easily sell large amounts of federal lands to private entities. Hell, even Hawaii or Alaska could, in theory, be sold to foreign countries. And we could (and do) lease parts of the interstate highway system to private entities to generate revenue through tolls.

More concretely, the “asset” backing the public debt is the ability to tax the production of the citizens of the country (or print money).

There’s no reason for the US to sell Hawaii, or anything else, to anyone. The US is a sovereign nation, not a homeowner or a private company. It creates the money that we use, and it has an unlimited ability to create however much money it wants, whenever it wants.

Recently, for example, the Fed’s created trillions of dollars, mainly by purchasing treasury bonds (US debt). This is an on-going program, with no end-date in sight. There is no particular limit to how much debt the Fed can buy, other than all of it (it can’t buy more than 100%).

The US could run out of natural resources. Or talented and creative labor. Or honest politicians. But it can’t run out of money.

Much of the current territory of the US was bought from other sovereigns so, in principle it could be sold again. And any publicly-owned asset which generates revenue can be leased or sold outright; this happens all the time.

But, I agree, this is not, largely, how US public debt will be serviced. It’s the tax capacity of the US out of which public debt is serviced. And the US government can borrow more cheaply than almost anyone else because the markets recognise that they can be highly confident of repayment, which means that the tax capacity of the US is seen as capable of servicing the US’s public debt.

I’m not an American, but doesn’t the step of making the purchased territory a state, and admitting that state to the union make it impossible (or so close to impossible as makes no difference) for the federal level to sell it off?

It’s practically and politically unthinkable, of course. But if we can postulate a situation a situation in which the Federal government might want to sell sovereign territory, it’s not much more of a stretch to postulate a situation in which the relevant state government(s) are onside with the project. They have debt that needs servicing too!

PS: I’m not an American either.