And… it’s gone! The Fed and US could simply CANCEL all $5 trillion of
intragovernmental debt washingtonsblog.com
Ocotber 13, 2013
As we documented here , Congressman Alan Grayson is correct that the Fed could cancel its own US
national debt holdings of ~$2 trillion. This could begin public justice from how our current system
transfers public assets into 1% private profits: currently conservatively estimated at $30 trillion
held in tax-free offshore accounts, and satirized in South Park’s Emmy Award-winning episode on
our bailing out the big banks with the catchline,“ And it’s gone.”
If one understands the mechanics of canceling $2 trillion in debt, there’s equal wisdom to likewise
cancel all ~$5 trillion of the debt held by Social Security and other intragovernmental holdings as
simple book-keeping because we literally owe this to ourselves.
And in this light, we could enact what is called “ monetary reform ” for the US Treasury to pay the
outstanding ~$12 trillion of debt held by the public as it becomes due with debt-free currency
created by the US government (criminal 1% elements in banking would be identified and their
crime-gained assets seized).
Ending the national debt once and for all, forever, is just one benefit of the several models (and
here) of cost-free government already known, beginning with Benjamin Franklin’s pamphlet on
colonial Pennsylvania operating its government debt-free and without taxes, to Thomas Edison
explaining debt-free money with Henry Ford in a 1921 summer media tour. Debt-free money could
be created to directly pay for public goods and services, and government could be employer of last
resort for infrastructure investment. Because infrastructure creates more economic output than
investment cost, this results in falling prices. So, we can have full-employment, the best
infrastructure we can imagine, and falling costs to consumers.
I teach Advanced Placement (AP) Macroeconomics (more challenging than most college-level
introductory macroeconomic courses), contribute to the ongoing education of ~2,000 AP Economics
teachers on our listserve, and had my published research in monetary reform honored by the
Claremont Colleges’ international conference on monetary reform in 2012.
This is the paper for my AP Macroeconomics students to understand money mechanics (and paying
the national debt), also contributed to our listserve AP teachers. To date, no colleague, student, or
parent has found any factual errors or incomplete information. This article is a shorter, non-
academic, documented explanation of our debt-condition and solutions.
Our condition, and why paying the national debt is our only good option: