Suppose the extreme case occurs where all countries outside the U.S. decide to rapidly move away from using the U.S. dollar as a reserve currency. Also, suppose that investors outside the U.S. wanted to sell their U.S. Treasury bills and bonds as soon as they mature and not buy new ones. Would there be any way to avoid a catastrophe in the U.S.? Alan Greenspan famously said that the U.S. can always pay its debt by printing money. Given the massive size of the debt (> 40 trillion), is it likely that a fire sale on U.S. treasuries, coupled with an end to the U.S. reserve currency, would cause hyperinflation in the U.S.?

How does this get fixed? What if we just default on it and start fresh?

Big A´s economic analysis relies heavily on neoclassical assumptions that simply don't apply to a currency-issuing nation like Japan.

If we look at the situation through the lens of Modern Monetary Theory (MMT), the narrative of a looming "debt crisis" or national bankruptcy falls apart. Here is a breakdown of why the traditional perspective misses the mark.

1. Sovereign States Don't "Borrow" Their Own Money

The video frames the situation as if Japan needs investors, pension funds, or foreign nations to buy its debt to keep the government functioning.

• Japan is the sovereign issuer of the Yen. It creates the currency the moment it spends it via simple central bank keystrokes.
• The government does not need to collect taxes or borrow money before it can spend. Bonds are just a monetary tool to manage interest rates, not a funding mechanism.
• The bond market doesn’t dictate interest rates to Japan. The Bank of Japan sets them. They pinned rates at 0% for decades simply because they decided to, proving they are fully in control.

2. National Debt = Private Sector Wealth

The video warns about Japan's astronomical debt-to-GDP ratio as a ticking time bomb.

• A sovereign default in a country's own non-convertible fiat currency is technically impossible. Japan can always pay obligations denominated in Yen.
• Accounting-wise, the national debt is exactly equal to the net financial savings of the non-government sector. Down to the last Yen, government deficit equals private surplus.
• Government debt is only "too high" if it pushes demand past the economy's real productive capacity, causing inflation. Japan has struggled with deflation for decades, proving its deficits were never actually too large relative to its economic output.

3. The True Bottleneck: Imports, Not Insolvency

The weak Yen is definitely a crisis, but it has nothing to do with government insolvency.

• The currency weakness stems directly from the interest rate differential between the Bank of Japan and the US Fed, driving the "carry trade" mentioned in the video.
• Japan's actual vulnerability is its massive reliance on importing real resources like energy, food, and raw materials. A weak Yen makes these essential imports painfully expensive for regular citizens.
• This is a hard real resource constraint, but it is entirely separate from the size of the national debt.

The Problem with the "Solution"

The video implies that Japan needs a "reality check" on its debt and spending. But if Japan were to follow this conventional wisdom, slash spending, and run a budget surplus to "pay down" the debt, the government would literally be draining money and net savings out of the private sector.

Wouldn't forcing a budget surplus under these conditions just plunge the Japanese private sector into a severe, manufactured recession?

Been recently learning about MMT and find it very intruiging, but there are still many open questions left that I hope you can give me answers to.

1. I've heard the argument that countries don't need to sell bonds - they don't need it to pay for government spending, ok I get that - but without the bonds, what would private banks do with all the bank reserves they are sitting on? It would make them essentially useless IOUs. Why would private banks play this game if they get no use out of creating new deposits for the government? And if your answer is liquidity or that it pays interest - what use is liquidity of an IOU that you cant do anything with? Or interest payments of an IOU that you cannot use for anything (besides buying bonds which in that case wouldn't be issued anymore)?

2. What exactly is a currency and why couldn't everyone create them? By a USD, do you mean bank reserves or private bank money or both? What about treasuries, repo, fx swaps and other securities? Are they all "USD" or just denominated in that currency? And since many of the USD in the world are created by private offshore banks (like in the Cayman islands, Singapore, etc.) what stops a country like Germany or Japan from issuing USD? If its just a ledger entry, why wouldn't it work for these countries if private offshore banks can do it? Not getting them accepted seems inplausible when compared like that, after all these are some of the major economic powers of the world. If Japan had USD debt, couldn't they just make a ledger entry with a "USD" instead of "JPY" and call it a day?

3. Why do we need private banks at all? If I understand it correctly, they are just bookkeepers that could be replaced by a blockchain. In China, private banks don't even create the money, they simply distribute whatever the PBOC created (which causes some issues around trying to hit quotas). By that logic a CBDC saves a lot of useless, outdated friction and middlemen.

4. What role do the IMF/BIS/World bank play? If the money is just a ledger entry it could be done easily without them

5. What's MMTs view on Bancor? And international settlement for that matter - not just between countries but also between companies from difference countries? Right now its all running on this Eurodollar system and Bancor would only account for public cross-government payments without changing the private settlement aspect

6. If its all just ledger entries, why have different currencies at all? Ofcourse politically speaking that will not happen in a 1000 years (see the disastrous EU results) but technically its already the same ledger money around the world. What about a decentralized blockchain currency so no single country be the reserve currency - would that still work while keeping a states ability to create money?

7. People like Steve Keen have critized MMT for ignoring trade imbalances - what's your response? (I would have to look up his exact statements)

Thanks in advance! Learning about different heterodox systems is always fun.

The honest tax, the round trip we can stop making, and the house we hand down

Let me talk with you about the hard one. Taxes. This is the part of the plan where the knives come out, and I'd rather walk into that with you honestly than pretend it's simple. So pull up a chair. Tell me where you think I'm wrong. That's the only way any of this is worth doing.

Steve Forbes was more right than they let him be

Years back, Steve Forbes ran on a flat tax — one rate, everybody the same. He got attacked hard for it, and some of the hardest shots came from people who read his own magazine and trusted his economics. Here's what I'll say about that, plainly: on the fairness of the idea, Forbes was right. Everybody paying by the same rule is not the cruelty people made it out to be. It's the opposite of a rigged game.

Where his plan ran into trouble was not his heart. It was his vantage. Steve Forbes is an economist, and a good one. He looked at the flat tax and saw something fair, and he stopped there — because that's where an economist's road tends to end. I come at it from a different corner. I was raised by a couple of men rooted deep in how money actually works, but I ended up a philosopher who thinks about people first. That's an odd pair of eyes to have, and I don't pretend it makes me smarter than Steve Forbes. It just means I can see one step further down a road he opened. I'm not tearing his idea down. I'm building on it. He helped.

The round trip nobody should be paying for

Here's the step past the flat tax. Even if Forbes's number had worked — and I don't think his number carried the load — a flat tax with no floor does something quietly foolish. It takes money from the working poor, runs it up to Washington, skims an administrative cost off the top, and then hands it back to those same families to pay for the things the whole country already agrees are worth paying for. You taxed them, charged them a fee to process their own money, and returned what was left.

That is a toll on a circle. And you don't need to care about anybody's feelings to see it's wasteful — you just need to be able to count. So we stop making the round trip. Below a floor tied to what it actually costs to live where you live — the District Poverty Level — you pay no federal income tax at all. We don't take it, skim it, and give it back. We just leave it where it is.

You cannot waste money you never collected in the first place.

The one complaint every American shares

In all my years, I have never once heard an American, left or right, say the real problem is that we help people who genuinely need help. That is not the complaint. The complaint — and everybody, and I do mean everybody, shares it — is three words: waste, fraud, and abuse. The government wastes the money. Some people defraud the system. Others abuse it. Fair complaints, all three. So let's answer all three, on the country's own terms.

Waste, we answer here by not collecting the money in the first place — no round trip, no processing fee, nothing to waste. But understand this is one piece of a bigger job. Waste turns up in every department of the government, and we go after it everywhere — the way we lay out in other briefings, department by department. This is not a single clever trick in one column of the budget; it is the same discipline applied wherever the money moves. Fraud and abuse, we answer the way a nation of laws is supposed to: we identify the people who are cheating the system and we exclude them, using the laws already on the books. Notice what that is and is not. We will not punish the family who needs the help to get at the handful who game it. We go after the ones who are actually cheating — by name, under existing law — and we leave the honest people alone.

A dollar is a dollar

Above that floor, one rate. It opens at forty-five percent, and it falls toward about thirty percent as we pay the debt down. And it is the same rate on every kind of income — a paycheck, a dividend, a capital gain, money made overseas — because a dollar is a dollar. The person who earns hers swinging a hammer should not be taxed harder than the person who earns his while he sleeps. That's not envy. That's just the same rule for everybody, which is the thing Forbes had right from the start.

And here's the part that makes the floor more than kindness. When we exempt the lowest earners and kill off the hidden taxes they pay all year — the payroll bite, the gas tax, the little nicks — that comes to real money for a family living close to the line. These are rough figures from our own work, meant to start a conversation and not to be carved in stone: a floor somewhere in the range of eleven to fifteen thousand dollars, and hidden taxes eliminated on the order of four thousand dollars a year for those families. Now follow that four thousand. That's four thousand dollars we no longer have to turn around and pay back out in support to offset what we took. We didn't take it, so we don't have to give it back. The kindness and the arithmetic point the same direction.

This is one beam, not the whole house

I need to be honest about something, because a campaign that tells you one policy fixes everything is a campaign that is lying to you. This tax idea isn’t a solution by itself. It can’t be. This campaign started from a hard truth: if you think you've solved a problem, you haven't looked hard enough, because no problem in this country stands alone — every one of them is tied to all the others.

So this beam only holds because the others are going in beside it. That exempted family isn't paying for their health coverage either, because of what we do on health care. The spending gets cleaner, the debt comes down, the floor rises as the country heals. Pull any one of these out and the rest sag. Put them in together and they hold each other up. That is the whole design. It is slower than a slogan and it is built to actually stand.

The house we were born into

Let me close where I mean to close, at the kitchen table, honest. We built this debt over generations. Everyone from the end of the Second World War to yesterday owns a piece of how we got here. And everyone from today to the year twenty sixty is responsible for the repair — not because we did it, but because we were born into a house that needs work. You want to keep the house, you fix the house.

And understand what happens if we don't. A neglected house does not sit politely and wait. It gets worse. Live in it and refuse to repair it, and the thing your children inherit is not the house you got — it's a house that has fallen further down. Nobody comes out ahead. That’s not where I want to live, and I don’t believe it’s where most Americans want to live. We have always wanted better — for ourselves, for our kids, for our grandkids. That wanting is the most American thing there is.

I will tell you the truth about my own place in this. I am not likely to live to see this finished. My wife, younger than me by twelve years, most likely will not either. My children might live to see some of it. It may be my granddaughter who lives inside the better country we start building now — and her children who simply grow up in it, never knowing it was ever any other way. I will not cut a ribbon on this. I am planting a tree I will never sit under. I am at peace with that.

You do not fix a house that's been neglected for a generation in a single week. You start, because starting is the whole job.

Because here is the reward, and it is the honest one — the only one I can actually promise you. A hundred generations from now, let them look back and say the men and women of the Second World War were a great generation. And let them say the ones who took the old house apart and rebuilt it, right at the dawn of the twenty-first century — they were the greatest. That is worth more than seeing it finished. That is worth being the ones willing to begin.

 

Martin A. Ginsburg, RN

Treasury, the IRS, and the office you've never heard of that decides when a law becomes real

 

Let me talk with you this afternoon about the plumbing. Not the exciting part of government — the pipes. Because there are three offices that handle every dollar you send to Washington, and if the plumbing leaks, nothing else in the house works. Push back where it doesn't sit right.

The Constitution is about as clear as it ever gets on one thing: Congress, and Congress alone, holds the power of the purse. The people's representatives decide what gets funded. But here's how it actually runs day to day — the Treasury collects the money, the IRS interprets and enforces the rules, and an office called OMB decides when and whether the money actually goes out the door. Three arms of the executive branch, all handling money that belongs to you and was promised by the people you elected.

The money does not belong to the agency. It belongs to the people — and Congress speaks for the people. The executive enforces. It does not invent.

The Treasury: a steward that drifted into a boss

The Treasury was built to do a plain job: manage the nation's money, handle the debt, mind the currency, advise on the economy. Somewhere along the way, the service job got overtaken by a policy job — deciding who gets a waiver, who gets a delay, who gets enforced against and who gets a pass. When an office that's supposed to keep the books starts handing out favors by discretion, some taxpayers get treated one way and some another. That is not what a steward does. We are going to put it back to minding the money, honestly and evenly, for everyone.

The IRS: fear where there should be function

Here is a hard truth about the IRS that most Americans feel in their gut. The tax code has swollen past seventy thousand pages. The agency's own help line is not even on the hook if it gives you wrong advice — you can follow what they tell you and still get penalized. So honest people who are trying to get it right end up hiring somebody just to avoid a mistake, while the biggest players hire armies of lawyers to make the whole thing disappear. The working family gets the audit; the giant gets the loophole. We have already laid out, in another briefing, how we replace this maze with one honest rate above a floor tied to the cost of living where you live — which makes most of this complexity simply vanish. Taxes go back to what they were meant to be: a visible contribution to the common good, not a trap built to catch the person who wasn't trying to cheat.

OMB: the quiet office that decides when a law is real

Now the one almost nobody has heard of. The Office of Management and Budget prepares the president's budget and reviews the agencies — fine. But it holds one power that ought to trouble you: it can decide when, or whether, money that Congress already voted for actually gets released. Think about what that means. The people's representatives pass a law, fund it, sign it — and one executive office can quietly slow-walk the money and, by delay alone, undo what the law commanded. That is not execution. That is obstruction wearing a technicality. We will hold OMB to being what it should be — a technical compliance office that makes sure the money goes where the law said, on time — not a political gatekeeper that can veto Congress with a stopwatch.

What we do about it

None of the fixes here are exotic. We set firm timelines so that money Congress appropriated goes out on a schedule, not whenever an official feels like it. We publish the Treasury's disbursement records in the open, so you and Congress can watch the money move in real time. We tie every spending decision to the actual text of the law that authorized it. And we put career professionals, not political appointees, in charge of tax enforcement, so nobody's audit depends on which party is in power. This is not the president micromanaging. It is the executive branch remembering it works for Congress, and Congress works for you.

This campaign will not govern with slogans. It will govern with receipts.

That is the whole of it. When you can see what you paid, what was owed, and what was spent, you can start to believe again. And when the people's representatives say fund this, it should be funded — not delayed, not diluted, and never quietly ignored by an office you were never meant to notice.

 

Martin A. Ginsburg, RN

https://news.ycombinator.com/item?id=49329347

Wondering what people think about this. The original Financial Times article is paywalled, of course, but for those who don't know, the autistic nerd-ghouls of Hacker News are the most hysterical people anywhere on the planet about US debt. There are articles about it on a daily basis, despite it being ostensibly a computer programming site. And since these are Silicon Valley computer nerds, everything they say is reflective of the opinions of the American ruling class elite.

According to them, America is permanently on the verge of default, which will happen any day now. And, if you point out that the US issues its own currency, they will say the value of the dollar will all be inflated away in the manner of Weimar Germany, Zimbabwe. etc.

I don't think any of us think the debt is high for any good reason--billionaires are getting tax cuts while the safety net is being eviscerated. But the idea that the US can be insolvent doesn't make sense to me. Thoughts?

The Seismic Shift of the largest Energy Flows is changing the Entire World’s Economic Future.

“Well, we're going to pay down debt. We have a lot of money coming in, much more money than the country has ever seen by hundreds of billions of dollars. And there could be a distribution or dividend to the people of our country. I would say for people that would be middle-income people and lower-income people, we could do a dividend. But one of the things we're going to be doing is reducing debt." - President Trump, August 3, 2025

President Trump’s two terms will add $16.8T OR 37% of the $45T TOTAL DEBT projected when he leaves office.

Essentially, the same debt as eight administrations before him (Regan, Bush, Clinton, Bush, Obama). How do you guys feel about this?

Seems to only be applicable to countries without sufficient currency sovereignty (Euro, developing countries with large trade deficits who need forex and foreign debt (USD) to finance those deficits, etc). Central banks of countries with sufficient currency sovereignty (Japan, US) have much more control over keeping interest rates low.

The dollar has been challenged repeatedly. Why hasn’t another currency replaced it?

The fed can't raise rates without hitting rock bottom and a hardcore recession ( which some argue we are already in,) but if they lower rates inflation is the issue. How the hell did we get here and is 'we do nothing with rates' the way moving forward? What a mess, don't you think? We can't keep it as is either because jobs are dying and the economy is suffering. I have way more to say on this but I'll stop here lol

a country can have to currency 1for regular use other for provide universal education and healthcare it can be printed but it will be converted to the 1 currency and the money which is printed will be used to build schools and hospitals