JohnJohn said:
Borrow. What collection agency is going to call Capitol Hill?
Who do we "borrow" from anyway? Your poll needs to give us background on the "national debt". Who do we exactly owe money too? I know we hear about "a huge national deficit". I am putting my foot down and not believing we have one until someone tells me who we owe.
In part, the US Treasury borrows money by selling US Treasury notes at public auctions. Who owns them changes over time. Right now with our record trade deficits with China, China is rapidly becoming the major owner of US debt. US treasury notes earn an interest rate.
The green paper money you use as "Money" to pay your bills with, and buy stuff with, says across the top of the paper note, "Federal Reserve Note". In the upper left area it also says "this NOTE is legal tender for all debts, public and private", so in essence you are paying your bills with someone elses debt, a Federal Reserve Note debt to be specific. Federal Reserve Notes do not earn interest.
As the economy grows, and the domestic product grows, more paper money and electronic money is needed in circulation in order to have stable prices for goods and services. If they print too much money, it stimulates inflation, too little money stimulates deflation (the Great Depresion kind of deflation if it goes to far for too long).
The money supply gets more involved with the relationship between banks and the Federal Reserve system and Federal Reserve Banks, and loan reserves..etc., but I think I already answered your question.
Oh, and one of the ways we float so much US debt (paper money) overseas is that we have maintained enough control of the world market for oil that we have been able to require that oil purchases be paid for with US dollars. Iran has been trying to break that dollar-oil monopoly by trying to switch to Euros recently.
It is also partly why oil doubled this past year while dollar droped something like 30% in value over the same period versus most other world currencies.
