“Paying off the national debt”: A movie with a surprise ending

Our national debt is $8.5 trillion, $4.9 trillion of which is held by the public.  Watch this movie about biting the bullet and paying it off.  Then decide how much you still like the idea.

[Note: “Savings bonds” is a catch-all for all US Treasury securities: bonds, bills, notes, etc.]

Now: Would someone help me understand why paying down the debt is considered such a great idea? [Note: over any timeframe, one year or fifty years, the principle above is the same.]

I seem to be in a teeny-tiny minority (my guess is somewhere around 1% of the people) who think paying down the debt is a really dumb idea—especially given our growing economy that keeps increasing our ability to meet our interest payment obligations.  [Today we pay some of the interest to ourselves, some to foreigners.  Interest payments require 10% of our tax receipts, down from 16% a decade ago.  In other words, the so-called interest burden has been decreasing, partly because of lower interest rates, partly because of growing tax receipts.]   

Yes, I think I am in a tiny 1% minority, so I’d like someone in the 99% majority to try explaining it to me one more time.  I still don’t get it.  Send me an email explaining why it’s such a good idea, please.

While I’m waiting, I’ll stay busy at this blog trying to triple my constituency to 3% of the population.  Reason: I heard a while back that if you can get the correct 3% of the people, the influencers, onboard with you, it’s possible to change the whole country. 

Just so I’m being clear: I do NOT want us to pay down the debt; I want to KEEP my savings bonds, and I want to buy even more of them, so I can park my savings in the safest investment on the planet, and bequeath whatever I leave behind to my kids and grandkids.   

[What if inflation erodes my principal, you ask?  Don't worry, it won't; I'll be investing in plenty of these.] 


UPDATE: Comments are open.

Comments

[Mabus]

Don't pay off the debt because then you'll have less money. That's an interesting argument. I wonder how the bank will react if you tell them that's why you haven't been paying your mortgage. The "savings bonds" aren't something you can choose to spend money on if you like; they represent a negative value of government money.

Even if you don't understand the basic principle of why you should pay off the debt, I think you can understand a more pragmatic one. You mentioned that interest payments represent 10% of your tax receipts. Think of what that money could do for things like education, health care, social security, border security, the military, ect.. Wouldn't a freer budget be a good investment in the future, something to pass on to your children?

(P.S. I apologize for any spelling mistakes, I'm known for those)

[Aaron]

Mabus,

Why did you buy the house with a mortgage in the first place? Oh, because you didn't have enough money for the investment, so you borrowed it and pay interest on it (maybe even 10% of your income could be interest payments.)

So by your logic, anyone who buys a house with a mortgage should have saved for years to pay cash and then they could free up all that interest they would have been paying for other things.

:0)

[Bret]

Mabus,
The rules for an entity which collects taxes and creates/maintains a fiat currency are different than the rules for an individual borrowing money. If your left hand lends your right hand money, are you, as a whole, in debt? No. If the treasury borrows from the Fed, is the United States in debt? No.

[David]

Bret,

You say that like the Fed is a part of the United States, not a privately-owned corporation. That's the problem with the debt. Qui bono? Not you and me.