I had a vague memory of an exciting idea some years ago. I watched a report where a Treasury official held up what he called a “Trillion dollar coin*.” He claimed he could use it to march across the street to the Federal Reserve, and pay down the national debt.
I ran with that thought, but did not understand what was going on well enough. I thought the Treasury official was merely making light of our monetary system. At that time I had not theorized deeply on things, but all by myself in subsequent years came to believe
- We could eliminate the national debt tomorrow, and nothing would change. Just eliminate it, draw a line through it with a #2 pencil, not pay it off. It’s all funny money.
- Budget deficits are political tools used to deny funding to some things while funding others. For instance, what I consider a noble cause, funding college education for well-performing students, would be denied due to “deficit constraints.” But a new war? We have tons of money, no restraints!
- Social Security and Medicare could be perpetually funded.
- The Social Security Trust Fund, an illusory “fund” at best, could be eliminated.
- Medicaid, which is in part funded by individual states, could be funded in full by the federal government. States are truly constrained by real budgets and would be relieved to be free of paying for Medicaid.
- Taxes on the public, merely a means of controlling spending and inflation, would continue. But the idea that the federal government is using that money to pay its bills is nonsense. The money just evaporates.
