All this debate about the government shutdown and the debt ceiling recently, I decided to write an entertaining alternative on how to solve the US National debt problem. Why don’t we donate money to pay it off? In the fiscal year 2012, the US Treasury received $7,749,618.27 in donations from people wanting to pay down the national debt.
Currently, the Bureau of Public Debt may accept gifts in the form of cash, an outstanding government obligation (pension), or even PROPERTY as a donation to the US government to help reduce the debt. At the rate of $7,749,618 per year in contributions, it would take more than 2,116,233 years to pay down the debt–assuming, of course, that the debt is fixed at $16.9 trillion, which we know is exponentially increasing.
However, if you too would like to participate in this contribution, you can make a donation to the treasury at
pay.gov. Your donation will be deposited to the account “Gifts to Reduce the Public Debt.”
“…there’s been a noticeable spike in voluntary payments made by taxpayers to pay down the government’s $15.7 trillion debt.
From October 2011 through April 2012, the Treasury Department’s Bureau of Public Debt reported it collected $5.8 million in voluntary payments from taxpayers earmarked solely for paying down the debt. That’s more than the $3.3 million collected during the entire 2011 fiscal year – which ran from October 2010 through September 2011.”
Canada has a similar program, as well: a so-called debt-reduction donation for people who think that they do not pay enough taxes. Don’t laugh–yet. Canadians have been proportionately been donating more than Americans. Below is a quote from the
CBC News;
“Canadians have recently been much more generous than Americans. In the 2009/10 fiscal period, Americans donated $2.8 million to their debt compared to Canada’s tally of $5.8 million. And in 2010/11 Americans donated $3.2 million, compared to Canadians’ $11.2 million.”
It is too bad that money is being channeled here because it is impossible to pay off the government debt. I am sure if these contributors knew how today’s monetary system works, they would not donate to their governments to pay down the debt. Today, money is debt. When money is created, debt is created. It is mathematically impossible to pay down the debt because that will virtually erase all the money in circulation. A very good explanation of how money is debt is done in the “Money as Debt” series (see here). Also, Mike Maloney does a great job explaining this in his recent video below.
All of the hard and easily liquidated currency is known as the M0 money supply. This includes dollar bills and coins in people’s pockets and mattresses, the money on hand in bank vaults and all of the deposits those banks have at reserve banks [source: Hamilton]. According to the Federal Reserve, there was $1.2 trillion in the “M0” as of July 2013 [source: Federal Reserve Bank of New York].
M1 represents all of the currency in the M0 money supply, plus all of the money held in checking accounts, as well as all of the money in travellers’ checks. In August 2013, the M1 money supply for U.S. dollars equaled about $2.55 trillion [source:
Federal Reserve]. However, banks operate under a
fractional reserve banking system, and do not have all deposits in hard cash. I was once asked to come back the next day at a bank when I asked to withdraw $2,000 in cash. Most of today’s money exists in digital form (watch:
97% owned).
M2 is the M1 supply, plus all of the money held in money market funds, savings accounts, and certificates of deposits (CDs) under $100,000. In August 2013, the M2 money supply was about $10.77 trillion [source:
Federal Reserve]. One can see how today we are living in a world of credit, a
creditopia, as coined by Richard Duncan in his book
The New Depression.
Thus, even if the government would take every penny you own, every US dollar in circulation, CD, and market fund, it still would not be enough to pay down the national debt. Debt is a vicious weapon that has the potential of robbing the wealth of the people and destroying a country or perhaps even a civilization.
Tragically, the money being spent on donations to pay down the national debt could have been used elsewhere and much more appropriately–in other words, to create investments and businesses and hence jobs in the US and Canada. That is what we desperately need.
