Newman has written a clear, logical explanation of what the national debt is, and how it works. The national debt, that huge number, is a record of the nation's equity. It is the nation's wealth. As Frank Newman, Deputy Secretary of the US Treasury of the United States of America under Clinton, explains it is a record of all the currency that the US has created since 1791 minus all the currency destroyed by taxes.
"The U.S. has a very long experience with Treasuries, which have been outstanding every year since 1791-- and that has certainly not prevented America from great progress. Total Treasuries held by the public have never been fully paid off at any time. During the last 50 years, Treasuries held by the public increased every year except for small reductions in five years. (pp. 32-33)."
"The U.S. has had Treasury securities outstanding every year since 1791, has never "paid off" the total outstanding, and will never have to. The U.S. financial system, including Treasuries, is always in balance, regardless of the amount of Treasuries held by the public; investors receiving U.S. dollars for maturing Treasuries must put the dollars in the U.S. financial system. As explained in Chapter 4, this is very different from securities issued by eurozone countries, where euros redeemed in one country can be reinvested in another country. (p. 60)."
Newman explains that the federal government doesn't "borrow" anything. It creates the money for the nation and what the nation needs first by spending, then by issuing treasury securities to keep the money supply in balance.
"Once we recognize that U.S. Treasuries provide both a means of payment for the U.S. government and vehicles for investors to keep financial assets with a government guarantee, the concerns often stated about "borrowing" and "national debt" fall in a different light. Typically, depositors do not think of banks as "borrowing" from them [when that, in fact, is the truth of the matter]. Banks and the Treasury provide two of many different ways for investors to hold their USD financial assets.
A more modern way to think of the Treasury auction process is not as the U.S. government "borrowing" safe money from people. Rather, the auctions are ways to allocate, through a market process, a limited supply of new Treasury securities to bidders who want to invest in the safety and liquidity of Treasuries. [And protect their savings when the amount exceeds the $250,000 that the FDIC protects.] (pp. 12-14)."
if Obama understood even 1/2 of what's in this book he would stop the sequester immediately, pour $2-3 trillion into infrastructure, telecommunications, research, and free health care, and remove the FICA payments that only hit the middle-class and the the poor. And NONE of this would be debt that would fall to our children and grandchildren. We are being destroyed by ignorance of how the federal government accounting system really works, and if Obama doesn't get a clue soon, his legacy will be that he destroyed this country financially.
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4.2 out of 5
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This book is an excellent companion to his first book The 6 myths that hold us back
Reviewed in Canada on April 6, 2022
