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.

The politics dominate the economy, elements of a different theory of the power, Theory of the Political Supremacy

Aerial view of the Capitol Hill [1]
The economics is not an autonomous discipline. It is subordinated to the politics. The most important economic decisions ---in all the countries--- are adopted by the politicians, this means, by the governments and not by the economists neither the economic sectors.
For example, the basic economic decision, that is the type of economic model that each society choose ---Free Market, Mixed Economy, Socialism or Communism--- is decided by the political factors of the countries. Obviously, they are influenced by the economic factors but these do not determine the definitive course of the economic policy.
The political factors ---governments and political parties-- represent the most powerful sectors of each society; they are the first power followed by the armed forces, the economic sectors, the mass media and the workers. Those are the real power of the society. They determine the composition of the formal powers.
After the political factors, the military power is the most important in all the societies: in the democratic advanced countries and in the rest of the political systems. It is hypocrisy to say other thing. In a first impression this seems not be true but in the reality that is the true. The following example illustrates very well this appreciation.
I remember to have read how ---in the days before the Pearl Harbor attack on December 7, 1941--- Washington warned to the Pacific Ocean Fleet about the imminence of the war. In the final days of November of that year the Secretary of State, Cordell Hull, said to the Secretary of War, Stimson that he had abandoned the negotiations with Japan and that since that moment the situation would be in the hands of the military forces. [2]
What means this? This means that Hull recognized that the time of the politics and the diplomacy had ended and the time of war was beginning.
In the democratic societies normally the armed forces do not participate in the politics. But an opinion of the armed forces in regard to any important affair is something that the structure of power can not disdain.
How the politics dominate the economy?
The laws of the economy are intellectual abstractions because in the reality the politics determines all the economic behavior in all the types of economic regimes.
The politicians, it means, the political parties and governments, are who decide the big economic policies; those are:
- The monetary policy (the value of the currency and the amount of liquidity in the economy)
- The financial policy (rates of interest)
- The fiscal policy (taxes, exemptions, including the bailouts to the banks)
- The commercial policy (regime of imports and exports)
- Wages Policy (minimum salary)
- Policy of prices (control or not)
- Agricultural policy
- Industrial policy
- Energetic policy
- Environment policy
The question is: what does really decide the private economy?
All the laws and rules that determine the economic behavior are decided by the governments. In consequence, the economy is a dependent discipline which laws and action in last instance depends of the politics factors.
Conclusion: these concepts might be the elements of a different theory of the power: the Theory of the Political Supremacy.
[1] Photo source: Commons.wikimedia.org/Wiki/file:aerial_view_o…
This work is in the public domain in the United States because it is a work of the United States Federal Government under the terms ofTitle 17, Chapter 1, Section 105 of the US Code. See Copyright.

[2] Daniel Yergin. La Historia del Petróleo. Page 428. Javier Vergara Editor. Buenos Aires 1992.