Take away the plus and minus signs and National Debt is our National Savings.
If this is a true statement then the National Debt of around 16 trillion dollars would equal National Savings of around 16 trillion dollars. The only measure of money that is anywhere close to that big ball park is the M3 money supply which is about 15 trillion dollars.
M3 Money Supply: The category of the money supply that includes M2 as well as all large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets
. This is the broadest measure of money; it is used by economists to estimate the entire supply of money within an economy.
Ball park numbers of money supply in its different categories can be found here or anywhere else you care to look. I choose this particular link because it presents and estimated number for M3 money supply which the Fed stopped reporting. That is the only number that is near GDP. Since the Fed does not report it then it is not a commonly found number. It is only produced by someone that still considers it important and there appear to be few of those??
Economists slice and dice money in to categories in terms of a range from liquid to degrees of less than liquid which can extend to anything being called money depending on any arbitrary designation, the extension appears go into the realm of "financial paper" that can be converted back to some more liquid form of money. The conversion process depending on a market to accomplish the conversion.
What buys stuff? I don't know but maybe can get to an answer by how much money it takes to buy stuff by starting with the stuff we buy. The stuff we buy is the stuff we produce, both about 16 trillion dollars worth of stuff a year. What we use to buy that is dollars. The same dollars get used many times per year as they change hands. That is the turnover rate. Any given rate of turnover determines how many dollar have to be in the money supply to achieve that turnover rate. Turnover, however is not an objective but a function result of many factors determining the money supply that are objectives.
Turnover rate of the money supply is a well defined and published general number.
GDP=Money Supply X Money Supply Turnover Rate.
To me, the dividing line of what is money and what is not money is weather or not we can use it to buy stuff, the stuff produced called GDP. If it buys stuff it is real money.
At the end of the 3rd quarter, 2012, the velocity of M2 money (M2v) was a 1.56 ratio to GDP as shown here. "Velocity is a ratio of nominal GDP to a measure of the money supply. It can be thought of as the rate of turnover in the money supply--that is, the number of times one dollar is used to purchase final goods and services included in GDP."
One (or all) dollar is therefore used on average 1.56 times per year to buy stuff (or all stuff called GDP). Does that sound right? Seems to be. The conclusion is what? We need a money supply of about 9 trillion dollars. Is that right? What number floating around in the world of M money supply as sliced and diced by economists is close to that?
M3 is 15 trillion. M2 is 10 trillion. Looks like must be M2 give/take 1trillion. It is a big ball park. 1 trillion is close enough.
M2 is the money supply we use to buy stuff.
My personal savings is where my money resides between the time I earned it as income and the time I spend it. By definition, savings are unspent income.
Savings are a revolving account. Money comes in, money goes out. The level of savings, the amount in the savings account goes up and down. If there is nothing in the savings account then there is nothing to spend.
Another way to look at it is that I fund my own savings account.
Another way to fund a revolving account of money as a repository for the flow of money in and out is to rent an amount of money to act as the working fund rather than provide that myself. That is credit. Interest free credit perhaps depending on the terms which might not charge any interest in the bill is paid in full on time every month.
Try a little bit of this credit, kid you will like it. Take it, buy some candy, its free for a month.
Personal Savings do not pay much in interest. The way to manage savings is to always have just enough to cover my normal expenditures. I control my expenditures so there always will be enough savings to cover payments when due. Others use short term interest free credit in the same way.
The National Debt is our savings, all of us, collectively on a national scale. M2 money supply is 10 trillion dollars if it turns over 1.56 times a year the National Debt is 16 trillion. There is a difference here..............explanation of that difference should not be hard to find, I will look for it later. I really don't know what money is unless I can put a number on it and say it equals something I know to be a fact. Money is an elusive thing. Maybe intra-governmental transfers have something to do with it..or the phases of the moon.
Is the money supply our unspent savings or is the National debt our unspent savings? These are not equal amounts.
Another way of looking at it is: What if we took all of our savings, 10 billion dollars in the different accounts existing today throughout the USA and put them all in one place with our names on our own account holding the current balance of our savings.
The following is redundant but I will leave it in as worth repeating to help me remeber what I already said.
GDP is 16 trillion dollars, and that is a fact. What we produce in a year is also what we buy in a year which is also the annual gross income we have to buy it with, all at around the 16 trillion dollar level. During that year of producing, receiving income for what is produced and then spending that income to buy what is produced we use the money supply as a revolving fund medium of exchange several times over. The computation of turnover tells us how fast the money is moving. That velocity is 1.56
If all this money, 10 trillion dollars were in one place then our money as a medium of exchange could be more efficiently and effectively managed. That is a plug for my digital dollars idea. All that 10 trillion is now in our collective savings accounts held by more than 9,000 members of the Federal Reserve Banking system.
However, this is a freedom of choice country. Not everyone wants to pur their money in one place especially if it is a government associated place. Unless that association is called FDIC. No individual needs to make sa change for the system to change from debt money to asset money and abolish the concept of National Debt.
My proposed digital money system does not change the role banks play in holding and accounting for savings. It introduces a higher level of record maintenance above accounting for savings performed by banks that contribute "value added" to management of our money by services beyond the clearing house for the exchange of our medium of exchange.
The primary record of money identified individually and collectively in fact as well as perception as "ours" moves up out of the bank creation and management to government level where we control our Money. When this situation exists we may chose to manage our money at this level directly or through our authorization of a bank to do it on our behalf and charge (or pay) us as a result of the value added services they provide as either a savings bank or investment bank or a combination of both.
In all cases, either we or the banks always go to the central record of Digital Dollar ownership to find the answer to the question: What is the current amount of money we call ours as a financial entity user of the money supply as a medium of exchange.
The bank becomes a user of account balance information, not the primary custodian and single source of this information. That is the one single thing to extract from the hands of the bank and move it to our hands. It is our money and our information totally subject to our management control because we transformed debt money of the bank to debt free money of the people.
The plan to make that transition from debt money to debt free money is here at this link:
The Chicago Plan Revisited
My proposal for digital dollars is presented as a logical, reasonable plan for exactly how a new system would operate based more or less on Object Oriented Design and Implementation to the extent that I understand what it is and what it does.
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