Debt-Free Fiat to pay for government expenses

The following is my comment regarding this article

by Glen Wallace

A possible solution not mentioned is to begin using the US Treasury as a significant source of new money to fund federal government projects and operations. Currently, federal government and governing costs are paid for by either revenue, mostly tax revenue, or by debt revenue, mostly through the sale of US treasury bonds. However, I'm talking about the third option that very few others are even publicly considering; debt-free fiat dollars computer generated by the US Treasury to pay for much of the US budget that is not debt service. Such large pieces of the budget pie as SNAP (food stamps), defense, medicare, medicaid, highways and a host of earmarks could all be paid for without incurring any debt or dipping into tax revenue.

I believe the generation of debt-free fiat is the ideal situation under circumstances such as the ones we face now. Presumably, as the Fed unwinds all that debt it paid for with new QE dollars, it will be receiving back those QE dollars and proceed to 'shred' most of it, thereby reducing the money supply. Such a huge reduction in the money supply could have a very negative effect on the overall economy. The solution then is to balance out the unwinding of the debt-based quantitative easing rounds with debt-free quantitative easing by way of US Government spending. And unlike the Federal Reserve's QE that directed funds largely at Wall Street, my easing suggestion would be one that would flush mainstreet with a gusher of currency.

And I think concerns about excessive inflation are unwarranted given that the debt-free generated fiat would match with real goods and services being paid for. Excess inflation occurs when the money supply grows much faster than the supply of goods and services paid for with the money in circulation. However, when the new debt-free fiat is used to pay for goods and services at competitive market prices, the ratio between the goods and services and the dollars to pay for them remains largely the same.

Meanwhile, the debt service on all those mountains of public debt would be much easier to service using dollars obtained from usual means of revenue -- but now hopefully without having to again resort to taking on even more public debt.