The following is an illustration of the way our deficit spending/federal debt works. We are now 18 TRILLION dollars in the hole, and paying interest on each one of those dollars. We blow through approximately another trillion dollars a year in borrowed money from the not-a-part-of-the-federal-government Federal Reserve System.
.gov: Man, I need a candy bar but I don’t have a dollar!
.fed: I got you .gov, here you go.
.gov: Thanks buddy: Free dollar!
.fed: no, that’ll be $1.03 next Monday
.gov: Next Monday? I’ll TOTALLY have $1.03 next monday.
(fast forward to next monday)
.fed: hey .gov about that dollar
.gov: ooooooh yeaaaah. About that. I don’t have it.
.fed: No problemmo! We’ll just roll it over, ok?
.fed: I’ll lend you a dollar…
.fed: …to pay back the dollar you borrowed.
.fed: and then you won’t owe me that other dollar anymore!
.fed: but you still owe me the second dollar
.fed: and you still owe me the $0.03
.fed: But don’t worry, I’ll lend you that too.
.fed: so now you’ll only owe me $1.0603
.gov: and you’ll need that by . . . ?
.fed: Next Monday again.
.gov: SWEET! Hey, you know I really need another candy bar. I wonder if I could bum another dollar off you.
.fed: Sure thing. That’ll be $2.1203 next Monday…