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This is fundamental to my position on economics - that the creation of all money must happen as a debt is a false axiom. Benjamin Frankin came up against this very thing, and the American colony's refusal to bow to the demands of the Bank of England and their policy of "no new money unless it is borrowed" (from some etheral pit) was the main issue which crippled the American economy and started the war of independence."

"Between them the Keating and Howard governments turned the PUBLIC national debt into a national credit, a lot of which was invested in the Future Fund for use in emergencies (such as the current crisis) and to cover pensions for retiring baby boomers. This was the correct way to proceed during times when the country was experiencing a minerals boom.

During a recession, when unemployment results in lower tax revenue and higher social security expenditure, the correct procedure is for the government to borrow money from overseas to be repaid when the good times return. This enables it to undertake infrastructure projects to increase employment, thus boosting retail spending and expanding the tax base. It is called pump-priming.

Unfortunately, the economic rationalists got into the act and urged the privatisation of vital public assets like the Commonwealth Bank, Telstra, rail freight, airports, CSL, hospitals, prisons, etc. Road building was parcelled out to corporations who operate in the interests of shareholders, not road users. This has enabled the government to cancel the public debt and thus have the revenue available to buy votes with tax cuts. All very well except that with the taxes we save we have to pay to use the services the government used to provide free. TANSTAAFL!
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"It is not an issue of who the money is owed to but that it is owed at all. We would not have a national debt if the government maintained control of money creation i.e. through the mint. Instead they have sold out to the World Bank and installed the Federal Reserve. The Fed is able to create an unlimited amount of money out of thin air, through credit rather than paper. This means banks are able to lend and collect interest on money that does not even exist.
there simply is not enough money in the world to pay back all debt and this is what perpetuates the cycle. this keeps the population locked into employment to pay for an ever growing cost of living, along with a plethora of taxes to maintain the national debt. this is not a national problem but a world one. "