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

Thanks for the quick reply akphidelt. My opponent loses sight of the big picture in rebutting my arguments; he proves small inconsistencies but ultimately does not prove his own case. 1) Money supply does not equal public debt. My opponent points out that there are other measures not included in M1 and M2. However, it should be his burden to show that if you add these in, it somehow equals the total national debt. In addition, his first round said that money issued by the Fed is a liability; all the deposits he just cited are assets, not liabilities, so shouldn't be included. Remember, the resolution is about money that has been "created." The money the Fed holds in reserve is by definition not "created" since the Fed creates new money using the dollars it holds in reserve as assets. In addition, my opponent never responds to my argument that there was a money supply before there was a public debt. This logically refutes his argument, without having to look to the numbers. 2) Fed purchase of Treasuries creates money My opponent points out that this does not create money directly but relies on other banks lending more. I agree – what I said was a slight oversimplification. To disprove my point, however, my opponent cites evidence for my side. He cites evidence that in spite of the purchase of nearly $1 trillion in Treasuries by the Fed, the money supply did not increase very much (his source: http://research.stlouisfed.org...). This proves MY SIDE, since it proves that a huge increase in government debt did not increase the money supply. 3) Banks are temporary purchasers My opponent seems to agree with this, with a few caveats. Ultimately, who cares? It doesn't affect the overall argument. If the bank puts the Treasury on its balance sheet, then sells the Treasury to a third party, this has not resulted in the creation of money, since the bank then wipes the Treasury's asset/liability off its balance sheet. Real money has been used to purchase said Treasury. 4) Maturing Treasuries My opponent seems to drop this argument and agree with me, only to make a new argument: that we must create money to pay for budget shortfalls. If we created money, we would be printing money. Let's say we have a deficit of $1.5 trillion. We could CREATE money to pay this off by printing 1.5 trillion dollars, which would cause massive inflation, but regardless, we could use the money we printed to pay for our budget shortfall. Or we could BORROW the money, meaning we will, at some point, have to pay it back. No new money has been created. Someone has actually purchased a Treasury bond (using money), and we use the money we got from the Treasury bond purchase to go about our government business. 5) ??? My opponent says this: "If the Bank purchases the debt with bank money and the Govt credits the nonbank public's account. Then we, the nonbank public, now have an increase in money available in which to invest in treasury's in the secondary market. This essentially means that the money purchases treasury's in the secondary market is the actual debt itself." My response: ?????? The bank purchases a $10,000 Treasury bond with bank money (which is actual money, like deposits). It then sells the bond to someone for $10,000, replacing the actual money it took out of its vault, with more actual money. Nowhere does the government "credit the public account," whatever that means. 6) Clinton My opponent is just wrong here. The numbers he's citing are for "gross public debt" which is "the total dollar amount of public and private financial liability in a country." [1] This is obviously illegitimate because it includes private debt. Look at the following chart from the CBO: you'll see a dip in the government debt during the Clinton years. http://en.wikipedia.org... Clinton reduced the debt by $363 billion in the latter 3 years of his presidency. [2] So my opponent is wrong that it is impossible for the government to pay down the debt, assuming he uses the right numbers for debt measurement. Thus, I win if you believe that: 1) 11 does not equal 14. Remember, the money supply is the liability on the Fed's balance sheet and everything my opponent cited (deposits) are assets. He said himself in Round 1 that "money created by the Fed" is all in the liability column. 2) If you believe that you could have a dollar in your pocket still, even if the government had zero dollars in debt. 3) You believe the government can pay off its debt whenever it chooses to. 4) You believe that Treasuries are sold for cash. Cash is traded for Treasuries and we use that cash to deficit spend. 5) If you believe the dropped argument that there are assets other than Treasuries that the Fed can use to create money (like gold). 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. 7) If you believe the examples (that my opponent gives of QE1 and QE2) where the Fed bought Treasuries but the money supply did NOT correspondingly increase. [1] http://www.ehow.com... [2] http://clinton5.nara.gov...