The debt can never be paid down, as long as the central bank here charges interest on the money they loan to banks.
Go Maple Leafs, they play good hockey and taste great on pancakes!
The deficit must never be paid off completely for a very good reasons.
The debt is the sum total of deficits so long as debt is intentionally kept in balance with deficits.* Maintaining this balance gives
the appearance of the government borrowing to spend amounts greater than its receipts. The amount of additional money left in the economy beyond government receipts is the deficit.
The mechanism the government uses to add additional money into the economy is to create deficits. This can be done by some combination of increased government spending and tax reduction. Additional money is also
temporarily created via the private sector lending-credit cycle.
As productivity and population grows the government
must furnish the economy with an every increasing amount of money to avoid deflation.
Unless there is a long term decrease in population and/or productivity the government must run small deficits; thus an ever increasing aggregate deficit is a normal occurrence and part of good money management on the part of governments with growing populations and productivity. The only problem created by deficits occurs after deficits greatly exceed what is justified by population and productivity growth plus what is required for desired increases in savings which fuels credit and investment.
The current deficit is unjustifiably high. Treasury-Central Bank operation can be used to temporarily sideline excess money in the economy. In an economy the size of the U.S.'s, there are huge lags. The ill effects of
excessive deficits may not be seen until long after the administration responsible for these excesses is gone.
Though it is tempting to think government money management is like personal money management, these two types of money management are two different animals. We must not think that the principles that guide our sound personal money management are the same for government. They are not.
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*Some countries have laws that require this, some do not. Technically the U.S. government does not have to borrow to spend in deficit, and in fact it regularly spends before it borrows. Although the government's issuance of Treasuries gives the appearance of the government borrowing to spend, the actual purpose of issuing bonds is somewhat different than it appears. These comments apply to a fiat money regime, but not necessarily to a commodity based regime.
