federal debt isn't bad.

Author: linate

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i personally believe too much debt is bad. but this guy below has another argument. it's over my head. i think there's some truth to what he says, but i don't know. i know there are a lot of people smarter than me here, so maybe one of ya'll can argue with what is posted below.

Is the natinoal debt and deficit bad?
Nowhere do these CRFB folks define what the National DEBT is.
They don't know.
Yet, they screed about it as if they do.
Our national debt is comprised of Treasury securities purchased by individuals firms and governments domestic and foreign who wish to preserve the value of their dollars.
Ergo, the transfer their non-interest bearing dollars from checking accounts to purchase interest-bearing Treasury securities.
The dollars used to buy the T-securities go into reserve accounts at the Federal Reserve and the T-securities are kept in security accounts at the Federal Reserve.
In no way can these purchases (exactly like your purchase of a CD) be construed as debt.
Interest is credited to T-security accounts by debiting the aforementioned Reserve accounts. No tax dollars are ever involved in paying interest on these SAVINGS ACCOUNTS.
The DEBT CLOCK on 6th Ave, NYC is pure fraud. It does, however, record all the dollars that have been spent by the Federal government since 1778 and not yet taxed. The $20 trillion-plus represents our National Savings.
Government debt is a private asset. You and I do not OWE government debt, we OWN it. Indeed, the only source of net dollar-denominated financial wealth is Federal government T-securities.
Here's a solution. Once the federal T-security sales reach $21.1 trillion, the Treasury would be prohibited from selling any more bonds. Treasury would continue to spend by crediting bank accounts of recipients, and reserve accounts of their banks. Banks would offer excess reserves in overnight markets, but would find no takers—hence would have to be content holding reserves and earning whatever rate the Fed wants to pay. But as Chairman Bernanke told Congress, this is no problem because the Fed spends simply by crediting bank accounts. (L. Randall Wray) https://goo.gl/m9hdQW
As for the Federal Deficit, they WRONGLY believe the Federal deficit is a bad thing.
They are completely unaware of the fact that wherever there's a deficit there's a surplus ... balance sheets must balance. A sovereign government deficit is nothing to fear. It is simply the mirror image of the non-government sector's saving. As the US private sector retrenched to rebuild its balance sheet, the government's balance moved toward deficit. There is an unrecognized identity at work. Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0.
In the case of the Federal budget deficit, it is equal to the penny to net financial surpluses in the non-government sector.
That's money in our checking accounts.
When the gov spends that becomes income to individuals and firms in the private sector. It's the new money that enters the economy interest-free and is essential in its contribution to economic growth. https://goo.gl/Fq9fKD


Greyparrot
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I mean it will be at some point in the future, but we can handle it for now.