I wrote you a letter recently criticizing your views on the federal deficit and the debt.
I am now writing with a short idea (which I have read from numerous economists) that I thought you might like to think about. I certainly have.
If you are worried about the United States' debt, why not have the Treasury cease to sell securities? Then deficit spending (the amount put into the economy by the government that is more than the amount taken out through taxes) would accumulate in reserve accounts at the Fed (the Fed's "checking" accounts) instead of in Treasuries (the Fed's "savings" accounts).
What is perceived as an accumulating debt that has to be "paid back" is really just the accumulation of savings at the Fed. The national "debt" is really the world's dollar savings. After all, the government’s deficit equals non-government savings of financial assets to the last penny.
Issuing Treasuries has no real function anymore since our government uses a floating currency. The money is printed out of nothing. Then the spending is offset by taxation to avoid too much liquidity in the system. Taxation and bonds do not operate as revenue generators. How could they? The money used to buy those bonds and pay those taxes came from the government originally, and it was printed out of nothing. It is illogical to say that money can start with tax revenues and bond sales. Where did that money originate? So despite what many people think and say about it, operationally, in absolute reality, taxes and bond sales do not serve the purpose of generating revenue for the federal government.
The only constraint on deficit spending is the possibility of inflation. But that is not a worry right now. In fact, deflation is still a worry, which means that the government is not deficit spending enough - since private credit is not generating enough growth right now and the world still wants to sit on dollars. Where else can new demand be generated except by federal fiscal stimulus? Inflation would probably be good right now, as it might encourage people to get off some savings and spend/invest it.
If we do get to a point where demand is too hot, we will be at a position of full employment with a booming economy. Then "demand-pull" inflation could begin to take effect. At that point, it would be wise to raise taxes in order to drain the excess demand out of the system. Or the Fed can tighten credit markets.
Thanks for your consideration of these issues. I know that you are a passionate, intelligent individual with the best interests of the nation at heart. I hope that you will look into the issues like I have. I am not an economist, I am a musician. But I believe that economic illiteracy is a huge danger to our nation right now, so I am reading up. And I still have a long way to go.