Back: The Government is Like a Household? Not Top: Getting Money Right

The National Debt is a Problem? Negatory

Only rarely will the payment of taxes exactly match the spending of the sovereign. Typically the spending exceeds the taxes, which is handy, since the excess of spending over taxes is the net amount of money sloshing around in the society for the use of all the subjects! Usually the excess of spending over taxes is called the deficit in reference to a specific period, or the national debt to refer to the total accumulation of spending in excess of taxation.

The US constrains itself to issue debt to correspond to the excess of spending over taxes. This is a policy choice, not a law of nature. The US further constrains itself by placing a limit on the accumulated excess of spending over taxes: the debt ceiling. These are purely matters of policy, not necessity. There's no necessity for the USG to issue debt to match the excess of spending over taxation. There's no necessity for the USG to cap the total amount of debt issued. Indeed, it's a terrible idea, unless you happen to enjoy the periodic theatrical posturing of politicians threatening to upend the fundamental underpinnings of society's financial wealth. The national debt is the only component of subject financial wealth which is free of involuntary default risk. We might do better to call the national savings.