Somebody in the comments a while back sent me this Mike Norman piece, in which he argues that the federal government paid off the national debt 4 times already…this year!
The phony debt crisis facing the United States is kept alive by this one, stupid, soundbite: “How are we gonna pay it back?”
The subtext, of course, is that the U.S. is deeply in debt to the tune of $14.5 trillion and there is no way we can ever pay it back. Indeed, even some great “minds” (NOT) like Jim Rogers have publicly said that the U.S. will never be able to pay back its debts.
Well guess what…not only can we “pay it back,” but we’ve already paid it back four times over–THIS YEAR!!
That’s right…the total amount of redemptions (public debt paid back) so far this fiscal year amounts to $58.8 TRILLION! That’s trillion with a “T.”
I am not making this up. Please see for yourself that number right off the Treasury’s Daily Statement.
[Norman links to a Treasury document.–RPM]
So we “paid back” nearly $59 trillion in the past 11 months without a hitch. The yield on 10-year Treasuries is below 2%. How did that happen? Simple…the Fed debits securities accounts and credits reserve accounts by whatever number it needs to. It’s paid back by mere accounting entries. That’s it. End of story. No digging up gold out of the ground, no mortgaging our future and best of all, no grandchildren involved. Please send to your Congressional representative.
If I had more time, I would call up the Treasury to verify this for sure. Barring that, let me say I am 99% confident that Norman here is making a ridiculous error. I think the Treasury document–which claims that there have been some $58.8 trillion in “total redemptions” in debt this fiscal year so far–is referring to the fact that the debt rolls over.
The fact that you can roll over maturing debt doesn’t prove that you never have to pay it off. Firms in the private sector roll over debt too–they “pay back” lots of their debt in a given year, even if their total indebtedness increases over the course of the year.