Come on, Ray. That quote is from some new-depressionist wacko and includes "all U.S. debt, .... defined as the sum of all recognized debt of federal, state & local governments, international, private households, business and domestic financial sectors."
This number is absolutely meaningless - it includes private sector mortgage debt, for goodness sake. The National Debt is not $30 trillion, as you say, it is approximately $3.3 trillion. What is more, if memory serves me correctly, only about one third of this number is external debt, the rest is held by US citizens.
The only debt problem the US has right now is avoiding paying the National Debt down too quickly.
I can play the game of meaningless non sequitur quotes too. How's this?
"Why Zero Debt is Undesirable
Driving the national debt down to zero, or even close to zero, has consequences that have not been adequately addressed. First it should be recognized that paying down the debt does not create additional money for the private sector. It merely transfers dollars from taxpayers to bond owners, and dissolves assets that are widely held as a savings vehicle. Those securities, together with the monetary base created by the Fed, comprise the net financial wealth of the private sector.
Treasury securities play a central role in the banking system and other financial institutions. Their abundance insures market liquidity that makes them particularly suitable for the Fed to buy and sell in executing its monetary policy. Most banks hold T-bills to serve as secondary reserves against their own liabilities. T-notes and T-bonds are valued in the portfolios of insurance companies and pension funds whose liabilities are mostly long term.
T-bills are traded daily in enormous volume among banks and other financial institutions around the world. A substantial supply of risk-free, interest-bearing Treasury securities is key to maintaining the U.S. dollar as the world's primary reserve currency. That in turn provides a significant advantage to the U.S. in the economic, political, and financial arenas. Seigniorage alone accounts annually for multi-billion dollar benefits to the U.S.
What if the Debt Reached Zero?
If all debt were actually retired, future budget surpluses would then force the Treasury to invest the surplus in the private sector. That is undesirable because it would involve many different types of securities and markets, none of which enjoy the liquidity of risk-free Treasuries. The unequal competition between the government and the public for the private sector assets could easily distort those markets.
A special problem exists if the debt reduction were allowed to continue at its current rate. That’s because a sizable amount of the debt matures too far in the future. Bonds can only be retired early at the pleasure of the bond holders, and no doubt by offering an attractive premium. This has recently been recognized by the Fed and is why Greenspan now recommends a sizable tax cut to prevent too rapid a drop in the national debt."
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