For high school grads only: can you find flaws in this logic?

[marvinsussman@sbcglobal.net]

Rules of the game: To win, you must disprove at least one of the 50 or so statements below. To simply deny the logical conclusion is to be like a child claiming victory after losing the game 50 – 0. Adults only!

Q1: For the taxpayers, is our “national debt” really a burden that must be repaid?
A1: No. For the taxpayers, it lacks those two qualities of a real debt. It’s a “Debt In Name Only”, a “DINO”-**

1. THE DINO IS NOT NOW AND NEVER WILL BE A TAXPAYER BURDEN.

The DINO is the total value of all maturing treasuries. By calling the DINO “unsustainable”, Wall Street con artists, plotting to privatize Social Security and make a fortune in commissions, have panicked the public, politicians, and journalists. But actually, it is not the taxpayers but the buyers of newly-issued treasuries who, in a virtual bond rollover, pay for redemption of the mature treasuries. In every auction, more bonds are demanded than are available. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed, with cost-free keystrokes, could create a demand for treasuries by buying large quantities in the open market. The taxpayer is NEVER burdened but almost all US voters are swallowing whole the Wall Street hoax!

Our Treasury is like a bank accepting money offered for certificates of deposit. While a bank with too many bad loans can certainly have too many maturing CDs, our non-lending Treasury cannot have too many maturing bonds unless its deficit spending is causing harmful inflation. And that happens ONLY in a war or emergency requiring rationing. It NEVER happens during a recession. During prosperity, banks are ALWAYS the main cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, regulate banks before cutting infrastructure projects.

2. THE DINO WILL NEVER BE REPAID AND SHOULD NEVER BE REPAID.

Only a budget surplus can reduce the DINO. Since Truman, no President has reduced the DINO and no annual budget surplus is now in sight. Indeed, to supply enough treasuries, the ONLY risk-free instruments used for trade collateral, insurance, pensions, bank reserves, etc., THE DINO MUST GROW WITH OUR ECONOMY. In fact, deflation and then depression will hit us hard unless large budget deficits replace the cash that we are now exporting.

Q2: Could savers make a “run” on US Treasury bonds?
A2: Only when savers can get risk-free returns from the Wall Street casino or from GM bonds, Illinois bonds, or Detroit bonds. Safety is not everything. Safety is the ONLY thing! That’s why the whole world relies on US bonds.

Q3. Could savers stop buying US Treasury bonds?
A3. Only when nobody needs risk-free interest for trade collateral, insurance, pensions, bank reserves, etc., etc.

Q4: Could savers prefer foreign sovereign bonds?
A4: Yes, indeed! Now, almost two thirds of the world’s reserve currencies are in US dollars and about half of all US Treasury bonds are held by foreigners. But if China’s infrastructure and productivity become better than ours, its sovereign bonds could become safer than ours. And that could happen only if US voters let their DINO concerns stop the renewal of falling bridges, failing schools, leaking sewers, creaking railroads, aging power grids, etc., etc.

Q5: Won’t we need higher tax rates to pay for infrastructure?
A5: The federal government needs taxes but not for spending. Just as you would destroy your redeemed IOUs, the IRS destroys its receipts, actually shredding bills and melting coins for scrap. Since Congress cannot touch a cent of tax revenue, it creates new money out of thin air (just like your bank creates loans), deposits it in the Treasury, and spends it with checks. The Treasury auctions bonds to finance deficits that are limited ONLY by the will of Congress.

The ONLY rational reason to restrict deficit spending is the onset of harmful inflation. Until then, Congress can finance both the DINO’s annual debt interest and our much-needed infrastructure. Every day, you fill your kitchen sink with water AND you prevent it from overflowing. Why can’t Congress fill our economy with money building infrastructure AND prevent harmful inflation? China builds 24/7 without harmful inflation. Why can’t we do that?
Q6: How can increasing the DINO be good for the economy?
A6: Every federal dollar spent and not taxed is saved by the private sector. Yes! DEFICITS = SAVINGS! The bad “Debt Clock” is also the good “Assets Clock”. Since we are exporting cash, deficit spending is our economy’s SOLE source of savings! Well, our (DINO total bank deposits) / GDP ratio is less than half of China’s comparable figure and our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one fourth of Hong Kong’s ratio. To become and stay prosperous, we need to DOUBLE the DINO / GDP ratio to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation. Ask Grandma how it was in the good old days!

Q7: How much should Congress tax and spend?
A7: Ideally, Congress should tax just enough to prevent harmful inflation and should spend almost enough to cause full employment (and harmful inflation). Result: low unemployment and low inflation.

Instead, bribed by Wall
Street, Congress taxes as little as possible, enriching the rich, and spends as little as possible, impoverishing the rest of us by restricting deficits / savings. Just as quacks killed George Washington by bleeding his “bad blood”, Congress is destroying our younger generations by reducing (possibly to zero!) our annual budget deficits / private sector savings increase / consumer demand. And, by bribing Congress to pass austerity budgets, the Wall Street charlatans are deliberately nursing a huge army of unemployed labor to suppress the wages and working conditions of the shrinking middle class.

Result: recessions, high unemployment, an army of unemployed labor, a growing under-class, a scared work force, declining wages and consumer demand: a downward spiral of despair threatening deflation and depression. Growing inequality will create a land of slums and gated communities: Hell on Earth!

Austerity today deprives our grandchildren of infrastructure that would surely enrich and p
possibly save their lives. We must educate all of them now and employ all of our resources to build the infrastructure that they will need when they become parents. Let’s follow Presidents Lincoln (railways, telegraph, land-grant colleges), Theodore Roosevelt (National Parks, Panama Canal), and FDR (TVA, PWA, WPA, etc.)

Q8: How should one vote?
A8: Vote only for someone who NEVER EVER worries about the DINO and who ALWAYS worries about Americans looking for work and reluctantly drawing benefits forever instead of building infrastructure.
Q9: “I have to balance my budget. Why doesn’t Congress balance its budget?”
A9: If you could legally print money in your attic, why would you balance your budget? Congress only needs to balance full employment against harmful inflation. Why is something so simple so hard to see?

To stay ahead of China, please help me convince voters that Congress, limited ONLY by the onset of harmful inflation, must build infrastructure”…to promote the general Welfare and secure the Blessings of Liberty to ourselves and our Posterity…” Please copy and distribute this message wherever you can.

[PastaBella]

Your question is really far larger than you should really be asking Yahoo readers to help with. I can give you some guidance, however:

First, the U.S. Treasury only mint's money when orders for that money have been placed by the Federal Reserve Bank (which is a Private entity not associated with the U.S. Government). Just as with consumer credit debt arising from people purchasing beyond their means, the government has been purchasing beyond their means for decades. And, the taxpayers are the recipients of the services and social programs purchased with this debt (increased national security costs, building and repair of roads, social security, and even the tax rebates given to homeowners who had lost jobs and whose mortgages were worth more than their houses. It was certainly those homeowners choice to purchase houses without ensuring that they had enough savings put aside for emergencies, and to not spend beyond their means (even if their unemployment could be attributed to investment and banking practices).

How can the U.S. government build infrastructure if they have no money to build infrastructure. Even if the DINO were erased, there would still not be enough in taxpayer dollars as the wealthiest Americans pay little to no tax, and more than ever of the remaining population or unemployed or underemployed.

[Philip H]

Absurd.
The interest on the National Debt is paid from general funds and not paying it means we must allow the Government to Borrow More to pay that interest charge, thereby increasing the Debt.
Fail to pay those obligations and just see what happens.
The Tea Party Patriots in Washington DC attempted to force the Government to balance the budget and we All know what happened than.
There are Consequences!
If YOUR scheme were legitimate then NONE of us would Ever have to pay Any taxes. Just keep borrowing the money and we can all Party!