The United States National Debt is the Amount of Money the United States has Created not Borrowed

Thanks for the quick reply akphidelt. ==What is M1 and M2?== I actually made a mistake before, which I now realized after looking up the definition of M2. M2 is everything in M1 (cash), PLUS savings (checking and savings accounts). [1] So the total money supply in the US is only $9.168 trillion. My opponent keeps saying you should reject M2 because it's too complicated. It's really not – M2 is the total amount of money in circulation. We don't count money in central banks (whether in the US or in foreign countries) in M2 because that money is not in circulation; it just sits on a balance sheet. $9 trillion still doesn't equal $14.6 trillion in government debt. ==Should we exclude intragovernmental debt from debt measurements?== My opponent contradicts himself so much that it's astounding. We should exclude intragovernmental debt because it makes it easier for my opponent to match it to his measurements of the amount of money circulation, but we should INCLUDE this measure when measuring whether Clinton reduced debt. You can't have it both ways. We should either count this as borrowing or not. We can't do both based on what suits our needs. ==My opponent's calculation of $9.6 trillion== Firstly, my opponent just cherry picks the numbers that add up to the number he wants. If you look to 1980, for example, national debt was $1.2 trillion [2] but the money supply was $2 trillion. [3] Say what you want about the money supply, but if you believe that all cash is created by debt, you CANNOT believe that there would ever be more money in circulation than debt. Second, he does a lot of double counting. A bank's net equity is defined as their assets minus their liabilities. However, bank deposits are assets and loans are liabilities, so he counts these twice, for example (the 1.5 number and the 2.4 number). Also, currency in circulation also includes savings accounts, which can easily be converted into usable currency. Cash in bank vaults is also a deposit. If you double count enough and cherry pick the numbers that add up to the one you want, of course you can succeed. Also, of course my opponent must exclude intragovernment debt because he couldn't find enough numbers, without triple or quadruple counting, to add up to $14 trillion. ==Money supply existed before debt== My opponent says, "The $11 billion of gold still priced at $42 per ounce [3], which is equivalent to $473 billion ($1600 ounce) in present value." First, how does $11 billion of gold at current value (what the Fed lists on their website) turn into $473 billion in value. I think my opponent changed $11 billion in gold to 11 billion ounces of gold, which is not what the source says. When a bank owns an asset (whether gold or a house), it lists the value of the assets under assets. So $11 billion of gold means they own gold currently valued at $11 billion. ==Fed purchase of Treasuries did not increase the money supply== Remember, the resolution says that when the government issues debt, it creates money. My opponent's own source said that QE2 bought Treasuries but failed to increase liquidity, meaning banks did not lend out any more money, so this failed to "create" money. ==Temporarily selling to banks who sell the Treasuries== My opponent says, "If the Govt issues $1 trillion in debt and the banks purchase it with bank money, then the Govt credits the nonbank public $1 trillion... then the nonbank public now has $1 trillion more to invest in treasuries." How does the government credit $1 trillion to the public, and where can I collect my share of that (approximately $500 billion)? This literally makes no sense; the government can't just credit money to us; does it sneak into our bank accounts, like the tooth fairy, and give us money? The bank temporarily holds onto the Treasury until a real buyer exchanges real cash for it. ==??????== My opponent says, "We do not need your tax dollars or China's money to fund our spending. It is funded behind the scenes with collaboration between the Fed's, Primary Dealers, and the Treasury." I guess we don't "need" any of those things, but we do use them, since the Primary Dealers don't keep the Treasuries. In addition, financial markets aren't stupid. If the US pays its debts by simply creating money, this causes massive inflation. We do NEED real purchasers to give us real cash money or inflation occurs. ==Banks don't use deposits== This still doesn't answer the argument that real cash is exchanged for the Treasury bond, ultimately. 95% of what my opponent responds to is just a red herring, since it's not central to my argument. ==Clinton== It's undeniable that the government can run huge surpluses if it wanted to. Even if Clinton did this by running surpluses in Social Security, we could ALSO do it by eliminating all military spending, for example, or by privatizing Social Security. This means that it IS possible to pay down the national debt. Nitpicking what Clinton did doesn't disprove the OBVIOUS general argument that I was making, that the government CAN pay down the debt if it wants to, which my opponent completely denied in his Round 1. Last, let's look to the dropped voters (which it's too late for my opponent to respond to now). Vote Con if you agree that: 3) You believe the government can pay off its debt whenever it chooses to, without shrinking the money supply. 4) You believe that Treasuries are sold for cash at the END POINT. Cash is traded for Treasuries, ultimately, and we use that cash to deficit spend (example, China buying our debt). 6) You believe that the Fed doesn't even need to issue debt to print money. It could just use a printing press, which is the whole point of the floating currency. The government can OBVIOUSLY create money without issuing debt. The other voters were already extended internally. Here's a new voter: remember 1980. Money supply was FAR larger than national debt. That shouldn't be able to happen if my opponent is right. [1] http://economics.about.com... [2] http://www.usgovernmentdebt.us... [3] http://one-simple-idea.com...