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.
“…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.”
“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].