What is ineptly, because of illogical comparison to personal debt, called the "National Debt," is simply the net accumulation of sovereign created money in the economy. We can refer to this created money as "outside money" to distinguish it from the money effectively created within the economy by credit and fractional reserve banking. This latter money is sometimes termed "inside money." To the extent the expansion of outside money has accommodated productivity growth, which can in part be attributed to population growth, the expansion can be thought of as a natural occurrence. Accumulation of deficits beyond this natural amount represents the net of unproductive, outside , i.e., sovereign, money supply expansion. It might be necessary to address this "non-natural" part of the accumulated deficit. Obviously how productivity is defined and measured is critical to any attempt to usefully study and discuss deficits and what constraints might sensible be placed on them. To my way of thinking, Larry Summers is on the right track.
What you call outside and inside money I look at being one and the same ... funny money. Other than the federal government, with the backing of the mightiest military in the world, saying something is money there is no there there. Debt is debt. Dotbombs found that out, there is no new paradigm. Last night Bloomberg had 1/2 hour on MMT - tuned 15 minutes into it. 2 debaters pro and con. Gist of it was they did a viewer survey before start of program (online I suppose and program might have been a rerun so I did not get a vote cast in any case) of what folks thought - MMT yes or no. Then they had another vote tallied at the end to see which side swayed more minds. I don't remember exact totals but it was something like 57 pro MMT before and 60something pro after. Which tells me sheeple can never pass up a free lunch of helicopter money.
My prior remarks did not have as much to do with that branch of modern economics now referred to as Modern Money Theory, or MMT, so much as they had to do with a common misunderstanding among the general public that what the public calls the "national debt" is no different from private sector debt, and therefore it must be paid down or it will surely lead to government bankruptcy and to an unconscionable debt burden visited upon our progeny... I expressed a personal view that was more in line with conventional views on what gives money value. In the conventional view, it is the goods and services money can be exchanged for that give it its value. What I suggested was important is the amount of money relative to productivity. I have posted many times that in my view our fiat money is productivity based. However the view of most MMT economists is that money is a creature of the State, AND it is taxes that drive its value.* My own views, unless and until they evolve further, are a hybrid of the conventional and the MMT viewpoints. I do fully except that government deficits don't require borrowing, and that the main purpose of the Government issuing bonds is other than to raise money to spend. I don't see how anyone familiar with the details of Treasury and Central Bank operations could think otherwise. This is very much in line with the MMT viewpoint. The problem faced by the MMT economists in getting their message across to the public is the same as that faced by all economists; namely a general, deeply held misunderstanding arising from the steadfast belief that the same constraints that govern one's personal handling of money should be the Government's constraints too. Nothing could be more absurd. You mentioned "helicopter money," a Milton Friedman expression; one that's stuck with us.. I have a lot of respect for Friedman's contributions, but he may have had a weak understanding of the separate roles played by exogenous and endogenous money -- what I have called outside and inside money, respectively. I don't think he understood that it was fiscal policy that controlled exogenous money, and thus the Central Bank was/is powerless to control it. His misunderstanding seems to have led him to think that the Central Bank could control inflation by directly controlling the money supply, rather than indirectly via interest rates. Friedman's ideas were implemented under Volcker, if I recall correctly, but failed. As a young man Friedman was very much influenced by a personal relationship with Hayek, though in later years he followed his own course. I think that Hayek's influence was not necessarily a good thing. __________ *This may be correct, but I have some difficulty accepting that taxes are the main, or sole, driver of money's value. I admit their arguments are strong however.