This is a subject where there’s a lot of confusion, don’t you agree? This is why we are inviting students to send us questions, queries and concerns about the size of the U.S. public debt.
A group of students from Franklin College Switzerland sent us a bunch of questions, including the following set, which begins our discussion. More will follow.
Has the U.S. government ever not been in debt? Has it even become close to repaying its debt?
The U.S. has had debt since its inception.
Find the dollar value of U.S. National Debt since 1791 here
Find a chart of U.S. National Debt since 1950 here
“By January of 1835, for the first and only time, all of the government’s interest-bearing debt was paid off.“ This has never happened since. Find more here.
You may want to know that the worst depression on record occurred in 1837, two years after paying off national debt: see :
How has public debt reached the current levels?
U.S. National Debt increases when the U.S. Government issues interest-bearing debt and sells it to the public for cash, or to the banks for bank reserves. Accumulation of cash held by the private sector, and of reserves held by the banks, results from government spending exceeding government taxing.
If public debt levels are so high, has the U.S. government ever been declared bankrupt or insolvent?
No, and it has always been able to pay its debt when due. Today, government makes these payments to government debt holders by converting the interest-bearing debt they hold into bank reserves, or cash.
What is the collateral for the national debt? How is this enforced?
There is no collateral for national debt, in the same way as there is no collateral for cash (dollar banknotes in circulation).