Trading Debt for Cookies

Tweet

I don’t have a degree in economics, but I understand the basics around debt and trade. As a matter of fact, if I were to talk about the effect of U.S. debt on the economy I would probably be better understood by most Americans than Alan Greenspan, but I would make a lot less sense. See what I mean? However, I think I have enough of a handle on monetary issues to have an intelligent discussion with a 10 year old. At least that was what I thought before last week.

While driving, my 10 year old pipes up from the back seat, “Why don’t they print more money to pay off the debt?” She frequently uses prepositions as if we’ve been having a discussion for some time. We hadn’t been, we’d been actually driving in silence—somewhat unusual when we’re together.

When I explain the basics of inflation and why we can’t just print more money she suggests that maybe we should just forget about it and start over.

So I follow-up on the basics of our global interconnectedness and how countries like China have actually purchased many treasury notes from the federal government and that we need to honor them. Undeterred, she then suggests that we give them something else instead, like furniture.

Well there’s an interesting option, but who, I ask, would make all that furniture without getting paid for it?

“Oh,” she quickly responds, “then how about cookies—everyone could bake cookies, everyone likes to bake cookies and everyone likes to get them!”