I am with Joseph on this. Lean years and fat years. When the new millenium dawned we were in the middle of fat years and the national debt was being reduced (slowly, but it was going down not up). The Republicans said the money should be used for tax cuts. They had a slogan, “A rising tide lifts all boats”. Actually, it lifted all yachts. But Bush both lowered taxes (principally for the wealthiest) and spent the surplus (and more, much more) on his project to turn Iraq over to Iran. This led directly to the current lean years in which the Republicans are now concerned with deficits, or claim they are. But as has been demonstrated repeatedly, austerity will not boost an economy. Although the deficits under Obama have been less than those of Bush, but it will take prosperity to actually begin to pay down the deficit.
Incidentally, I see Keynes as channeling Joseph. So yes I am a Keynesian, but really a Josephian.
Of course we’ll borrow money forever. Our children will not pay our debts nor will any future generation pay our debts. To pay off the debt requires a surplus, and when we had the last surplus Bush said it belongs to us and used that as an excuse to cut taxes for the wealthy. Remember, surpluses belong to us and deficits belong to nobody.
The Treasury is constanting redeeming and reissuing bills, notes, and bonds. If there were an actual surplus, they would just redeem something without rolling it over.
As someone noted upthread, this would potentially cause financial turmoil, as a lot of people and entities like to buy US debt.
This is a puzzling statement. Most bonds can be - and often are - exchanged for other items of value. The original owner receives cash, land, etc. The buyer receives the right to the interest, and then the principal when the bond matures.
But you return to the point I made. Paying off the debt isn’t even a desirable goal!
The debt cannot be allowed to get too large, we all agree on that. But we should borrow money forever. Our children should not pay our debts. We want a level of debt that serves the public interest, and this level of debt will probably never decrease in nominal dollars. Any goal to reduce it should be a gradual reduction in real, per capita dollars.
People need to stop thinking of the national debt like it’s equivalent to their personal car loan or credit card balance.
You remember incorrectly. Clinton specifically proposed to pay off the national debt by 2013, and actually made several hundred billions’ worth of reduction to the debt owed to the public.
The quantitative easing program from 2008 through 2014 did exactly that. The Federal Reserve bought back treasury bonds from the banks (among other things) to increase the banks’ liquid assets and decrease the amount of money the banks had invested in goverment securities. They did this with cash, which the Fed can do because they can create money.
The government can pay its future debts with tax revenues or by creating new money. This isn’t a problem as long as the growth of debt doesn’t exceed economic growth over the long run.
Yes, of course: you basically can’t demand anything - you must pretty much always seek out a willing seller, and offer sufficient value in return. Which value might well include bonds.