Reducing the debt by retiring it means taking money out of the economy with taxes. This will create recessionary presures.
Reducing the debt by retiring it does mean taking money out of the economy with taxes. But if the taxes are taken out of a much, much larger private economy - one that is booming from a massive decrease in regulations, and a much, much smaller size of government it won't be recessionary. Lifting the regulations and reducing the cost of government will make a much bigger (i.e., profitable) private sector. At the same time, the tax rate can be reduced especially for business and result in a larger overall tax revenue (Laffer Curve).
If this is the apporach taken to reducing the debt by cutting spending and reducing regulations it won't reduce the money that is in the private economy and then there will be no recessionary pressure.
All future obligations of the Federal government in excess of tax income can be taken care of merely by creating more money.
There is a point where the psychological demand for money, when it is being printed, grows far less than its actual supply. This is a tipping point that can not be predicted and when it arrives it can't be turned around, it can't be stopped, and people have to use wheelbarrows to cart enough paper money to buy a chicken.
You ask ANY country that has suffered a run-away inflation and they will tell you that nothing is worse - not depression, not a total credit collapse, and not even losing a major war. It destroys the ability to have specialization or to store value for any future time, or to have contracts. It destroys the ability to have a free economy. And, from what I've read about the past instances of run-away inflation throughout history, it destroys the civilization itself. No large organization or structure can exist when its employees find they have to go out and root-hog or die - to scrabble about and scratch up a way to feed the family on a daily basis.
Countries with trade surplus with the US absorb US dollars...
Countries that sell their products to us are finding the dollars they receive rapidly growing worth less and they will start demanding something else. It will be a choice forced upon them, and we will be forced to give them something that isn't dropping in value even though it costs us more.
And right now, there is an agreement underway to blend in the Chinese Yuan and to diminish the dollars in that basket of currencies that make up SDRs (Special Drawing Rights, issued by the IMF). When the use of the dollar ceases to be the international currency - the worlds reserve currency - it will cause a sudden and disasterous decline in the worth of the dollar for everyone and our prices here could jump by 15% to 30% in a few weeks. There is also the moral question of expecting to give what amounts to something similar to counterfit money, or monopoly money in exchange for real goods.
... the point is there is no value to be created by reducing the national debt, only the dis-value of deflationary recession or even depression.
Interest rates are being held very, very low - articially low - by the fed. But they can't get away that for too much longer. (Interest rates are the price of using money - and what the fed is trying to do is engage in price controls - it won't work for that much longer and the unintended consequences will be awful.... and they are already bad.)
When interest rates finally rise, even to a historically normal 5% or 6% the results (when the national debt is 18 TRILLION) will be disasterous. I've already pointed out that the debt CAN be paid off while actually energizing the economy. And the only way to avoid a depression, or a massive credit collapse leading to a depression, or a run-away inflation that ends in a major depression is to get rid of the debt, stop inflating the currency and MASSIVELY decreasing the size of government and reducing taxes and regulations. There are no other paths out of this terrible mess that will work.
Don't think in terms of reducing US national debt except by growing the GDP relative to it. Think in terms of reducing government size and functions. Deregulate.
Yes! Exactly. I couldn't agree more.