Thanks very much - here is Lawrence Kam's response to a posting I made on another thread:
Talk : International : Currencies and the Global Capital Markets
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To: DoubleD (1254 )
From: Lawrence Kam Friday, Feb 12 1999 2:08AM ET
Reply # of 1259
>the accountant in me says that if the debt increases there can't be a paydown or surplus.
This is a popular misconception. Let me refer to "Understanding the Federal Debt and Deficit," published by the Fed NY:
How large is the debt?
As of October 1, 1993, (hey, what do you expect, this is a government publication) the gross federal debt was $4.35 trillion [currently 5.6]. But many people look at net debt, which excludes about $1 trillion [currently 1.8] of the gross debt that is held by various government accounts. Net debt, also referred to as publicly held debt, is a more accurate way to measure how much debt the U.S. government has to repay.
Why?
Because when the government lends to itself, it hasn't borrowed any new funds. The $1 trillion [1.8] is money that the U.S. Treasury owes to different parts of government, such as the Social Security Trust Funds and the Highway Trust Funds; it's purely a matter of internal government bookkeeping. It's more accurate to consider the net debt, which is what the government as a whole owes, and that's about $3.3 trillion [3.8].
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