Economics, the “science” that doesn’t believe in data.

As “everyone” knows, the federal debt is way too high.

In the previous post, “Veronique de Rugy has a PhD in economics. So why doesn’t she understand Monetary Sovereignty?“, we quoted Ms. de Rugy:

“As the U.S. faces the consequences of runaway pandemic spending and deficits that could add $25 trillion to our existing $36 trillion national debt over the next decade, “neither party is serious” about tackling the problem.”

“The so-called ‘debt’ is nothing more than the total of deposits in T-security accounts at the Federal Reserve—a form of savings for the private sector, not actual borrowing.”

So, calling it a “national debt” is actually misleading. It’s not something the U.S. must “repay” in any traditional sense. It’s more accurate to think of it as net financial assets that the federal government has injected into the private sector.

The so-called debt has risen, as the above graph demonstrates. It was very high during World War II, then fell to nearly nothing post-war.

But to cure the 2008 recession, it began its dramatic rise, which has Ms. de Rugy and virtually every other economist all aflutter. As she said:

“With Washinton in a state of bipartisn denial,’ the debt crisis will only get worse.’”

What exactly is the “debt crisis”? She never says. Actually, no one ever says what that “crisis” is. In fact, all the data seem to show that as the “debt” rises, the economy grows:

Along with fears about the federal “debt,” economists seem to shudder about the Debt/GDP ratio. We often have been told that when the ratio reaches 50%, 80%, 100%, or some other arbitrary number, then awful things will happen.

But they never happen.

In our earlier posts, we demonstrated that the debt-to-GDP ratio is not a meaningful indicator. It does not predict the federal government’s ability to pay its debts (Its ability is infinite). The ratio does not show anything. See: “Enough already with the Debt/GDP ratio“)

The federal “debt” also has been called a ticking time bomb since 1940, and we’re waiting for it to go off. It’s proven to be a dud. (See: “Historical BULLSHIT Claims the Federal Debt Is a “Ticking Time Bomb”: From Sept. 26, 1940 to October 10, 2024“)

What has been missing from all those claims is specificity. What exactly is the problem with high federal debt?

Here are some general claims, none of which is supported by data:

• Higher Interest Rates

  Claim: As the government “borrows more,” it competes with private borrowers, driving up interest rates (the “crowding out” argument).

  No data supports this. The Fed sets interest rates. The U.S. doesn’t borrow in a market-driven way; it issues currency. So interest rates are a policy choice, not a supply-and-demand issue. There is no evidence that the vastly increased debt has forced interest rates up.

• Inflation

  Claim: More government spending = more money = inflation.

  No data supports this: All inflations are caused by shortages, not “too much money.” Deficit spending that eases shortages (labor, housing, energy) can reduce inflation. The solution to inflation is targeted spending, not austerity. There is no relationship between federal spending and inflation. See: “At long last, let’s put this inflation question to bed.“

• Debt Service Becomes Unsustainable

  Claim: As debt rises, so do interest payments, “crowding out” other spending.

  No data supports this: The federal government can always pay interest in its own currency. And again, it chooses interest rates. There’s no risk of involuntary default. There is no evidence that the vastly increased debt has crowded out private borrowers.

• Burden on Future Generations

  Claim: Today’s borrowing saddles future taxpayers with repayment.

  No data supports this: Taxes don’t fund federal spending. “Paying off the debt” is just swapping Treasury securities (savings) for cash. No burden is passed on—future generations inherit the assets, not a liability.

• Loss of Investor Confidence / Currency Collapse

  Claim: If debt gets too high, investors may stop buying Treasuries, or the dollar could collapse.

  No data supports this. Treasuries aren’t “bought” to fund the government—they’re offered as a place to park dollars that already exist. The government doesn’t need to entice buyers—it creates the dollars it spends. Plus, confidence in the dollar is based on productive capacity and stability, not some debt-to-GDP ratio.

SUMMARY

The so-called “federal debt” isn’t federal (the dollars in Treasury Securities are owned by the depositors, not by the government) or debt (the government merely holds the dollars for safekeeping, as with a bank safe deposit box).

It poses no threat to, or burden on, the government or the public. 

The entire debt story is designed to convince the public to forego some of the benefits the federal government provides.

As Ms. de Rugy claims, “Republicans, for their part, try to convince voters they care about the deficit but feed the delusion that they can balance the budget through discretionary spending cuts that leave Social Security and Medicare untouched.”

That is the story the wealthy tell. They want to cut social programs to widen the income/wealth/power Gap between them and the rest of America. The wider the Gap, the richer are the wealthy.

I can’t say whether Ms. de Rugy is in cahoots with the rich or merely ignorant of Monetary Sovereignty. Still, articles like hers greatly damage the nation’s economy and people.

Economics is a science loaded with data, but economists don’t believe the data.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

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Facebook: Rodger Malcolm Mitchell;

MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;

https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY

Source: https://mythfighter.com/2025/04/10/economics-the-science-that-doesnt-believe-in-data/