The debt is not a problem for the U.S.

The United States of America has issued trillions of dollars in bills, coin and bonds because its national currency, the dollar, is the international currency of interchange. Those instruments (bills, coins and bonds) are simple debt. This is something normal because of the size of the international transactions. However, there are critics that condemn this policy and assure that the debt is something negative for the United States and the rest of the world. The individual people and private institutions that assure this do not say the truth. The most of them have particular interests on the theme. They want to diminish the dollar strength as international mean of interchange to favour other currencies like the Euro and/or the Chinese currency.

The emission of money, in cash or in bonds by the United States, is for the United States internal debt and not foreign debt. It is completely different the effects of the internal debt from the foreign debt. The last constitute a factor of weakness for the economy of the countries because the foreign debt must be paid with international means of payment, it mean, with dollars of the United States of America, and not ever the countries have the sufficient amount of dollars. But for the United States of America the situation is different, because the US can issue the amount of dollars that requires its internal economy and the international economy.

1. Value and support of the national currencies

Since the Agreements of Breton Woods, in the post war, the value and support of the national currencies of the different countries of the world was established in base to the dollar of the United States of America. In those years, in Breton Woods, the countries agreed: a) the creation of the International Monetary Fund, b) that the international reserves of the nations must be kept in dollars c) That the dollar would be the international currency of interchange, and d) that the emission of national currencies should maintain a relation with their reserves in dollars. For example, if you set that your national currency is worth in two (2) units per dollar, this mean that each national currency in circulation should be supported by a reserve of 0.50 dollars, but not ever the nations carry out this rule. In all the cases, the set of the parity regarding the dollar is an act of sovereignty of each government; this means that they can issue more or less amount of national currencies.

I don’t believe in public fiscal deficit; the governments have sovereign capacity to issue national money; which is the support? The people faith, nothing more; none currency has an own value, per se. The currencies of all the countries are simple papers without intrinsic value that are accepted by the people to make transactions in the market and the governments have the power to issue those papers. In the past, the currencies had an intrinsic value, because they were made of gold or silver. But with the apparition of the bills of paper the situation changed. At the beginning the bills had a support in gold but along the time this support was eliminated and now its support is only its credibility, its acceptance.

The currencies cannot be supported in gold for a simple reason: all the gold that exists in the world is not enough to support the big amount of money that circulates in the world.

The debt of the United States instead of to be a factor of weakness of its economy and the world economy, is a factor that reveals the strength of the US economy. The financial crises are caused by the owners of private fortunes to obtain personal benefits. They do the crisis and the governments pay the bailouts. That is the true truth.