On March 1 of 2019, the federal government bumped into its debt limit. Congress did not reset its self-imposed limit for several months. That forced Treasury Secretary Steven Mnuchin to use “extraordinary measures” to keep the government open and operating. However, after five months the Bipartisan Budget Act of 2019 was finally enacted, which allowed Congress to resume borrowing money until the middle of 2021, well after the 2020 elections. Taxpayers should be right grateful to Speaker Nancy Pelosi for her tireless efforts in putting them on the hook for another couple trillion dollars in debt. But hey, what’s a little additional debt compared to the federal government going into default?

Democrat politicians and their proxies in the establishment media have blathered on and on for years about the possibility of the federal government’s “default.” But default is when you can’t service your debt, that is, pay the interest on your loans, and pay your loans off when they mature.

Default is not indicated by government shutdowns, where the feds, say, close national parks. If the feds were really strapped and cut or lowered Social Security benefits, would that constitute a default? In fact, Social Security could be repealed, and contributors would have no basis for a suit based on nonpayment of a debt, as SS benefits aren’t contractual (see Flemming v. Nestor). It is only when actual debt obligations can’t be met that it can be said that a borrower is in default.

In 2011, Business Insider ran “Why It's Absurd When People Say: ‘Well, The US Can Always Print Its Way Out Of Debt’” by Joe Weisenthal. What sparked the article was a statement by former Federal Reserve Chairman Alan Greenspan: “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”

Chairman Greenspan sounds like a regular MMTer there, a disciple of Modern Monetary Theory. To hear “the maestro” making the above statements, click here for a video that’ll take 22 seconds out of your life. But, is “zero probability” the same as zero possibility?

Weisenthal’s article has four charts from the St. Louis Fed that he uses to bolster his contention that printing money isn’t just a way, per Greenspan, to monetize the federal debt. Rather, “we're always printing. It's not an escape hatch where we go into inflation overdrive to pay our debts. It's just what we do every day. And the market is fine with it.” Yeah, but what “deficit scolds” worry about is the much faster rate of money printing that we might get in a full-blown debt crisis.

But Weisenthal is right, the Fed is “always printing” money in its open market operations, or OMO. OMO is the means by which the Fed controls inflation, and the Fed does this by buying and selling U.S. treasuries and other assets. A ramped-up form of OMO is QE, or quantitative easing, which the Fed used during the Great Recession. (On January 7, Fox Business aired a segment on Charles Payne’s show headlined “How will Federal Reserve's new ‘toolbox’ impact economy?” that touches on QE, interest rates, and other Fed matters that’s worth watching.)

Greenspan spoke of the federal government’s ability to pay “any debt.” One wonders whether there any limits or restrictions on what the government can print money for. For instance, there are several types of obligations that the federal government runs up. Not only is there the debt incurred by selling U.S. securities, which is what the debt limit is all about, but there are also “bills,” such as paying private sector businesses for the stuff that the feds buy. The defense industry comes to mind; the feds buy fighter jets, aircraft carriers, and other expensive items from private businesses. Can the government just “print” the money to pay for such procurements? If it can’t, then Greenspan’s statement would need a little clarification.

People talk and write glibly about the federal government “printing” money. Of course, they don’t mean manufacturing tangible money like bills and coins; they mean creating electronic money, central bank digital currency (CBCD), which comes into existence on government computers. Some, like the MMTers, contend that the federal government can never run out of money, and therefore can never go bankrupt. Such rhetoric carries with it the implication that the feds can create money whenever and however they like, and for any purpose.

But is that true? Can the federal government create electronic (i.e. digital) money whenever they choose? Perhaps Speaker Pelosi can just call up Federal Reserve Chairman Powell and say: Jerome, this is Nancy, your Speaker. I need you to print us up another trillion dollars; we need some cash to pay for the healthcare or our undocumented Americans… No Jerry, I refuse to let you call them “illegal aliens.” No human being is illegal. Now, I’ll need the money just as soon as your receptionist can type it in.

Is the Fed’s OMO the only way that the federal government can create electronic money? What this kid has wondered about is whether some money creation might be “automatic.” In particular, I’ve wondered about “intragovernmental holdings,” the so-called “trust funds” for “off-budget” programs like Social Security. What exactly happens when the nonexistent trust funds are tapped to be spent, such as when the “special-issue securities” in the OAS Trust Fund are “redeemed” and used to pay Social Security benefits? One might assume that the money must be “raised,” either from taxes or from borrowing yet more money.

Since Congress raises the debit limit every time it hits it, we don’t really have any limit on sovereign debt in this country. What we have is more of a speedbump than a limit. Even so, the debt limit is used by members of Congress to take hostages, and leverage concessions for more spending from those who wouldn’t otherwise agree to it. Perhaps Congress should do away with the debt limit. Perhaps Congress shouldn’t spend so much money. Regardless, those who vote for raising the debt limit should be taxed at the maximum statutory rate for the rest of their lives.

In none of these debt-ceiling brouhahas that Congress has been treating us to for lo these many years has there been tax revenues that are so small that the federal government couldn’t pay interest on the debt. Now, paying off the trillions in loans that come due each year is another matter. The feds rely on there being buyers for their securities so that maturing loans can be rolled over. If U.S. securities fell out of favor in the bond market, then the Fed might need to start printing money “like there’s no tomorrow.”

Perhaps the main reason that the feds have been able to borrow so easily is because the rest of the world is such a mess. If the EU, Japan, and China would get their act together, we might have a harder time selling our debt instruments. At which time we might embrace the Old Verity that debt and deficits do indeed matter.

Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.