In a letter published March 29, 2019, Chester Rorvig of St. Cloud objected to the existence of a numerically large national debt, apparently believing that this debt was to be repaid in future by extracting finite resources from the nation. This represents a mistaken impression regarding the nature of sovereign fiat currency. It would be true under the classical gold standard, prevailing until the early 20th century. It would be nearly true under the Bretton Woods arrangement and London Gold Pool system prevailing until the later 20th century. Since Nixon closed the gold window in 1971, it is not true in any way.

Under the Federal Reserve system currency is created by lending at interest. Since it is not possible to repay a loan denominated in that currency with currency which was not lent, the interest can never be repaid within the system. Therefore the debt distributed over all sectors of its denominated economy must increase continuously. When the debtor is the federal government, that means that the private sector has less of the debt. The only way for the federal government to have less debt is, like squeezing a balloon, for the debt to move to the private sector. This would be very damaging to the economy, as increased debt service would consume income which would otherwise recirculate in commerce. Debt-based money is not a limited resource. Unlimited amounts of debt-based money can be created by further lending. More generally, fiat currency issued by a sovereign is not a limited resource. Even without debt, the sovereign can issue unlimited amounts of currency, which is typically made desirable to own by requiring that tax payments be made in that currency. This effectively threatens non-users with imprisonment, for nonpayment of taxes.

It is because the voting public generally does not understand these simple facts that the red herring of debt can be used to distract, and generate political outrage and spurious divisions within the electorate, much to the advantage of the ruling classes. The state budget needs to be balanced or insolvency will result. The federal budget is denominated in a currency which can be issued by the federal government at will – as Kennedy did with U.S. notes shortly before his death in 1963. It is a chimerical phantasm. The alternative to it is forcing the private sector into servicing a bugaboo, driving the nation into penury.

I urge voters to verify these facts to their own satisfaction. There are very real, imminent and deadly threats to the people and governance of the United States. This is not one of them, and anyone attempting to deceive you in a manner which distracts from those is, as a result, a threat to your welfare, security and posterity.

Anthony Kimball

Fergus Falls


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