The United States Has No National Debt, And Thus, No National Debt Limit
The current $31.56 Trillion Treasury Securities Holdings, the so-called U.S. Federal Government Debt, falsely touted as the U.S. National Debt, is a Monumental Fraud. Hence, Stop Destroying the United States and American Citizens with this Monumental Fraud and Fallacy of National Debt and National Debt Limit.
It is shocking that in this 21st Century, we Americans are still perpetuating Alexander Hamilton's 1790 profound error of equating U.S. Treasury Securities Holdings to U.S. National Debt. No wonder the First Vice President of the United States, John Adams, wrote the following excerpt in his Letter to Thomas Jefferson on August 25. 1787.
"All the Perplexities, Confusions and Distresses in America arise not from defects in their Constitutions or Confederation, not from a want of Honour or Virtue, So much as from downright Ignorance of the Nature of Coin, Credit and Circulation.
In other words, We Americans even in this 21st Century still do not understand the Nature of Money, Credit, and the Circulation of Money and Credit. Hence, our erroneous continuance of equating U.S. Treasury Securities Holdings to U.S. National Debt. We must stop this fallacy.
At this very moment, second by second, the US Debt Clock (https://www.usdebtclock.org) is flashing in bold red, $31.56 Trillion plus, as the United States National Debt. It's a reminder, warning all Americans that the so-called United States National Debt is getting out of hand. What a deadly bald-faced lie and deceit. This $31.56 Trillion Treasury Securities Holdings, the so-called Federal Government Debt, falsely touted as the United States National Debt, is a Monumental Fraud. As of Feb. 20, 2023, American Businesses, American Households and U.S Governmental Agencies held $24.26 Trillion worth of United States Treasury Securities, while Foreign Countries like China, Japan, and other International Entities held $7.30 Trillion worth, making up the total $31.56 Trillion Treasury Securities Holdings or Investments. The profound question is --- is the $31.56 Trillion Treasury Securities Holdings a U.S. National Debt?
To answer this question we must first analyze the paradigm or conceptual Framework or Frame of Reference, and the assumptions underlying the theory or story that,
(1) U.S. Treasury Securities Holdings = U.S. National Debt
If the paradigm and its assumptions are true and correct, the theory stands, but if defective or false, the theory fails. To get to the bottom of this theory, we start from the beginning. History tells us that, in the United States, Alexander Hamilton and his then Treasury Department started this theory of equating U.S. Treasury Securities Holdings to the U.S. National Debt. On Sept. 18, 1789, the new Secretary of the United States Treasury Department, Alexander Hamilton, entered into negotiations for a temporary loan to the Federal Government with the Bank of New York and the Bank of North America --- the only two banks in the country at that time. The following February in 1790, the deal was consummated and the Federal Government borrowed $19,608.81. This was the start of the Federal Government Debt under the new Constitution.
In this instance, Hamilton actually borrowed money, the $19,608.81, from the Banks on behalf of the Federal Government. This was an actual Federal Government Debt, not U.S. Treasury Securities Holdings.
Hamilton, enamored by the British Aristocracy, Economic and Political Systems, thoroughly studied the British Political and Economic Systems. He subsequently ushered into the United States the British idea of using the so-called National Debt as an instrument to assert National Power. Britain had founded the Bank of England in 1694 and its government bonds traded freely in the marketplace. Thus, it was able to borrow at much lower cost than France and repeatedly defeated its much larger and theoretically more powerful rival in the endless wars that engulfed the 18th century. Hamilton firmly believed that a similar type of National Debt, "if it is not excessive, will be to us a national blessing."
To achieve his objective of equating the U.S Treasury Securities Holdings to the U.S. National Debt, Hamilton sent to Congress on Jan. 14, 1790, his "Report on the Public Credit." In it, he proposed redeeming the old debt on generous terms by issuing new bonds that would be backed by the revenues from tariffs, the main source of the federal government's income.
Hamilton's final proposal was to create a Bank of the United States, modeled after the Bank of England, to act as the government's fiscal agent, provide a sound paper money supply, and be a source of loans for the government.
Hamilton's program of selling bonds to raise funds for the Federal Government was extremely successful. Within a couple of years, United States bonds were selling above par in European markets because they were regarded as very safe. Brisk trading in government bonds ushered financial capital markets into existence in the United States for the first time, and both the New York and Philadelphia stock markets started operations in 1792.
Hamilton's proposal to redeem "the old debt on generous terms by issuing new bonds that would be backed by the revenues from tariffs, the main source of the federal government's income" suggest that his and the Treasury Department's Paradigmatic Assumption is that Taxes (Tariffs) are the main source of Federal Government Revenue. Expressing this Mathematically,
(2) Federal Government Tax Receipts = Federal Government Revenue
Hamilton and the U.S. Treasury Department went further to define Treasury Securities Holdings as both a Federal Government Debt and a National Debt, even today, as lucidly shown below:
The
National Debt Explained
The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In a given , when (ex. money for roadways) exceeds (ex. money from federal income tax), a budget results. To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury , , , , and . The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which is common, the national debt grows.
https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/#the-national-debt-explained
The U.S. Treasury Department further made the following emphatic statement:
"The U.S. Treasury uses the terms “national debt,” “federal debt,” and “public debt” interchangeably".
https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/.
The
St. Louis Fed calls the Treasury Securities Holdings "Federal Debt: Total Public Debt"
https://fred.stlouisfed.org/series/GFDEBTN
The US Debt Clock calls the
Treasury Securities Holdings "US National Debt"
https://www.usdebtclock.org/
From all the above, it's quite obvious that Hamilton's and the Treasury Department's paradigmatic assumptions are,
(1) Treasury
Securities Holdings = National Debt
(2) Federal
Government Tax Receipts = Federal Government Revenue
(3) National Debt =
Federal Government Debt = Public Debt
Removing the common denominator, Debt, from equation (3), the equation becomes
(4) Nation = Federal Government = Public
And there lies the problem. Equation (4) above is totally false. The Nation is not the Federal Government, the Federal Government is not the Public, and the Public is not the Nation. Hence, the National Debt is not the Federal Government Debt and the Federal Government Debt is not the Public Debt.
Now, each and every Nation including the United States has three most Active Agents of Change, the Household, Business and Government. The Nation, Household, Business and Government are all Social Institutions in the minds of their human Creators, but the Nation contains all three, the Household, Business and Government. Expressing this mathematically,
(5) Nation =
Household + Business + Government
Hence,
(6) National
Deficit = Household Deficit +
Business Deficit + Government Deficit
and
(7) National Debt = Household Debt + Business Debt + Government Debt
Equations (5), (6) and (7) above are the correct Paradigms or Inertial Frames of Reference for calculating the actual National Debt. The cumulative Treasury Securities Holdings over the years are neither the Federal Government Debt nor the National Debt.
Federal
Government Debt is not National Debt
The Federal Government is not the Nation and hence, the Federal Government Debt is not the Nation's or National Debt. Government Debt involves borrowing only from the private sector of the economy - from individuals, corporations, and various financial institutions, including banks. When a Government obtains its funds from its central bank (the United States Federal Reserve System, the People's Bank of China, the Bank of England, the Bank of Italy, the Bank of Japan or any other Central Bank,), it is actually creating money rather than borrowing it, since the purchasing power is made by the central bank and no obligations to the public are created. As stated earlier, the so-called Federal Debt, falsely touted as the National Debt, is assumed to be the cumulative Federal Budget Deficits over the years. What exactly is this Federal Deficit?
What is the Federal Government Deficit?
(8) Federal Deficit = Anticipated Federal Tax Receipts - Projected Federal Budget
where the Projected Federal Budget (Spending) is greater than the Anticipated Federal Tax Receipts. If the Anticipated Federal Tax Receipts are greater than the Projected Federal Budget (Spending), there is a Federal Surplus.
Whatever the case, the Federal Government doesn’t own the Federal Taxes until they have been voted and collected, and the Federal Budget (Spending) is Projected. Thus, both Anticipated Federal Taxes and Projected Federal Budgets are mere illusions, not concrete figures.
What happens when there is a Federal Government Deficit?
As explained by the Treasury Department,
In a given , when (ex. money for roadways) exceeds
(ex. money from federal income tax), a budget results. To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury , , , , and . The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities.
https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/#the-national-debt-explained
The Treasury Department further defines the National Debt as "the accumulation of this borro-
wing along with associated interest owed to the investors who purchased these securities." In other words another Paradigmatic Assumption of the Treasury Department is,
(9a) National Debt = Cumulative Federal Borrowings (Treasury
Securities)
or
(9b) National Debt = Cumulative Federal Deficits and Surpluses over the years
We are now confronted with the question ---- Is the so-called National Debt an actual Debt or an Investment in Treasury Securities? To answer this question and eliminate the confusion between National Debt and Investment, we need to know the meaning of National Debt. What exactly is a Nation's or National Debt? For clarity, let's first break down the phrase "Nation's or National Debt" into its components, Nation and Debt. Hence, what is a Nation? A Nation is a large group of people who inhabit a specific territory and are connected by history, culture, or another com-monality. What is Debt? Cambridge Dictionary defines Debt as "something, especially money, that is owed to someone else. Investopedia defines Debt as "an amount of money borrowed by one party from another". This second definition is clearer and more suitable for our needs. As such, a Nation's or National Debt is an amount of money one Nation borrowed from another Party or Nation, outside of itself, and not in its own currency. A Nation cannot borrow money from itself in its own currency because the Nation owns the currency, just as a Person cannot borrow money from him- or her-self because the person owns the money. This particular type of Debt is the National Foreign (External) Debt, succinctly described below.
National Foreign (External)
Debt
National Foreign (External) Debt is a loan obtained by a Nation outside of itself, from foreign lenders, such as foreign commercial banks, foreign governments, and international financial institutions, in the currency of the lender or creditor. In short, for national external debt, the loan should and must be in the creditor's currency, not the debtor's currency, and all repayments must be made in the creditor's currency in which the loan was issued. Based on this premise, did the United States as a Nation borrow money from say China in Chinese Reinmimbi or Yuan as part of its National Foreign (External) Debt? The categorical answer is NO.
National Domestic
(Internal) Debt?
National Domestic (Internal) Debt is a loan obtained by an Individual, Individuals or Parties from other Individuals, Parties, and Domestic Financial Institutions including Local Commercial Banks within the Nation. In this instance, all repayments are made in the same local currency in which the loan was issued. Subsequently, we can clearly state that every Nation including the United States has a National Domestic (Internal) Debt and a National Foreign (External) Debt, as described above. In both types of Debt, actual money is borrowed, not money from selling Treasury Securities. The following Table shows the National Foreign and Domestic Debt of the United States, and the Treasury Securities Holdings, as of February 20, 2023.
|
Description |
Domestic or Internal |
Foreign or External |
|
United States National Debt |
$68.81 Trillion |
$0.00 Trillion |
|
Treasury Securities Holdings |
$24.26 Trillion |
$7.30 Trillion |
|
Total |
$93.07 Trillion |
$7.30 Trillion |
Assuming both the Foreign and
Domestic Treasury Securities Holdings or Investments are part of the United
States National Debt, then the National Domestic Debt is $93.07 Trillion, while the National
Foreign (External) Debt is $7.30 Trillion. Thus, why all the fuss
or noise about a United States $7.30 Trillion National
Foreign (External) Debt compared to the $93.07 Trillion National Domestic Debt? It
just makes no sense. What we Americans need to worry about is our
heavy $68.81 Trillion
National
Domestic Debt, rather than $31.56 Trillion Treasury Securities
Holdings, especially our $24.46 Domestic Treasury Securities Holdings, which
are Investments.
What is an Investment? Merriam Webster Dictionary defines Investment as (i) the outlay of money usually for income or profit, and (ii) a sum of money invested or a property purchased. Cambridge Dictionary defines Investment as the act of putting money, effort, time, etc. into something to make a profit or get an advantage, or the money, effort, time, etc. Investopedia defines Investment as "an asset or item acquired with the goal of generating income or apprecia-tion. Appreciation refers to an increase in the value of an asset over time. When an individual purchases a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth. An investment always concerns the outlay of some resource today—time, effort, money, or an asset—in hopes of a greater payoff in the future than what was originally put in. For example, an investor may purchase a monetary asset like the U.S. Treasury Securities now with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit."
As succinctly defined and explained above, a Debt is money borrowed, while an Investment is money put into something like property or asset to make a profit in the future. Hence, a Debt is not an Investment and can never be an Investment. As such, U.S. Treasury Department sales of Treasury Securities including Bonds to raise funds for the Federal Government is not a National Debt (Domestic or Foreign), but an Investment in Treasury Securities including Bonds. After all, Treasury Securities are Promissory Notes which are Money in themselves, albeit illiquid. The Government cannot sell money as debt to buy money, with interest to boot. The Government can only sell an Investment, Treasury Securities in this Case. Thus, Treasury Securities Holdings are Investments not U.S. National Debt.
To buttress this fact that U.S. Treasury Securities are Investments and not Debt, let's compare the various auctions the U.S. Treasury Department holds to raise funds for the Federal Government. First, the Treasury Department holds regular auctions to sell marketable securities such as Trea-sury , , , , and finance the so-called Federal Government Debt falsely touted as the National Debt.
Second, the Treasury Department also conducts approximately 300 public auctions throughout the U.S. and Puerto Rico each year, to sell properties, forfeited as a result of violations of federal law enforced by the Department of the Treasury or, for nonpayment of Internal Revenue Service taxes. This is further explained as follows by the Treasury Department.
Property auctioned by the Internal
Revenue Service (IRS)
· Real Estate, Vehicles, and other merchandise
Property seized/forfeited due to violations of federal laws enforced by the U.S. Depart-
ment of the Treasury and the U.S. Department of Homeland Security, auctioned by the Treasury Executive Office for Asset Forfeiture (TEOAF).
· Real Estate
· General Property, Vehicles, Vessels & Aircraft
· Additional Cars (in cooperation with the U.S. Department of Homeland Security)
Sales proceeds from TEOAF auctions are deposited in the Treasury Forfeiture Fund. Revenues from the Treasury Forfeiture Fund are used for law enforcement activities and for restitution to victims of fraud.
https://home.treasury.gov/services/treasury-auctions
Since proceeds from auctions of Treasury Securities Federal Government Debt falsely touted as the National Debt, then proceeds from the auctions of Properties seized/forfeited due to violations of federal laws enforced by the U.S. Department of the Treasury and the U.S. Department of Homeland Security should also be Federal Government Debt, falsely touted as the National Debt. What's good for the goose is good for the gander. How absurd, that proceeds from sales of seized/forfeited properties like cars, houses and even merchandise are the National Debt. This confirms without a scintilla of doubt that Treasury Securities Holdings are Investments, not the National Debt. It is time we buried forever, Alexander Hamilton's 1790 profound error that U.S. Treasury Securities Holdings are U.S. National Debt.
Thus, we now conclude without a scintilla of doubt that the $31.56 Trillion Treasury Securities Holdings, falsely touted as the U.S. Federal Government Debt, is not the U.S. National Debt. Subsequently, the United States has No National Debt, and without a National Debt, the United States also has no National Debt Limit. The U.S. National Debt and National Debt Limit are deadly illusions we Americans must immediately excise from our psyche, unless we want to self-destruct and also destroy the United States. Moreover, Taxation does not and cannot finance a nation and must not be used to finance a Nation. Federal Government Tax Receipts are only for financing the actual Administration and Operations of the Federal Government, not the Nation. This is boldly spelled out in the U.S. Constitution, and the next article entitled,
Taxes do not and cannot Finance a Nation,
and the Federal Government Taxing Clause is not National Revenue Clause
makes this very explicit. And without Taxation to finance the Nation, there are no Federal Government Budget Deficits accumulating into the fraudulently deadly and false National Debt.
So, stop Destroying the United States and American Citizens with this Monumental Fraud and Fallacy of National Debt and National Debt Limit. The United States has no National Debt and subsequently, the United States has No National Debt Limit. You've been informed.
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