My letter to the NY Times re: How the U.S. Amassed Debt of $31 trillion

Re: Mr. Jim Tankersley's front page, above-the-fold, article of "How the U.S. Amassed Debt of $31 trillion, published on Sunday, January 22, 2023.

I was disappointed that Mr. Tankersley never did answer his own question. Reporting that both Republicans and Democrats spent more and more year after year does answer how that can happen. So, let me enlighten Mr. Tankersley and the Times' readers. The Fed's monetary base, composed of bank reserves and cash, grew from $.910 trillion on September 2008 to $5.419 trillion on November 2022. M3, the most inclusive metric of the nation's money supply, grew from $7.840 trillion on September 2008 to $21.352 trillion on November 2022. (These numbers can be found on the website maintained by the Federal Reserve Bank of St. Louis.) Since the government and everyone else expects the annual federal budget deficit to exceed one trillion dollars per year until the cows come home, we can expect these monetary metrics to keep growing. But that doesn't quite answer the question, does it? The real answer is that taxes and the bond market cannot absorb a trillion dollars per year in increased debt; therefore, as in the past, the Fed will monetize the debt; i.e., it will print money out of thin air. Raising interest rates will not help, although the Fed should get out of the business of trying to control interest rates. The only relief will come from drastic—and I mean DRASTIC—cuts to federal spending.

There...now Mr. Tankersly and the readers of the Times know "How the U.S. Amassed Debt of $31 trillion.

Patrick Barron