The Nation’s Ledger: How I Stopped Fearing the National Debt and Learned to Read It Like a Systems Engineer

Introduction: The Tyranny of a Trillion Dollars

For years, I lived a life of professional cognitive dissonance.

As a policy economist, I was fluent in the language of deficits and debt.

I could build models, dissect Congressional Budget Office reports, and debate the nuances of debt-to-GDP ratios with the best of them.¹

It was my job.

But on a personal level, the U.S. national debt terrified me.

The numbers were simply too large to comprehend, seemingly designed to induce a state of low-grade, persistent panic.

First it was $20 trillion, then $30 trillion, and now, as of late 2024, it has blown past $35 trillion.²

Each new trillion-dollar milestone was announced on the news like the tolling of a great, ominous bell, a countdown to some inevitable, yet perpetually undefined, catastrophe.³

My struggle was this: the public conversation about the debt felt completely disconnected from the analytical reality.

It was a dialogue of the deaf, dominated by fear, political posturing, and one profoundly flawed analogy.

I would listen to politicians warn that we were “bankrupting our children” by comparing the nation’s finances to a household budget, and I knew, with professional certainty, that the comparison was fundamentally wrong.⁵

Yet, I had no better story to tell.

My expert tools—complex charts, econometric models, academic jargon—were useless in the face of a simple, powerful, and terrifying narrative.

How could I, an expert, feel so powerless to explain this concept in a way that was both accurate and accessible? How could we, as a country, have a productive conversation about something we so profoundly misunderstood?

This report is the story of my journey to answer that question.

It is a journey that took me far from the halls of economic policy and into the unlikely world of software engineering.

It’s a story about how I stopped seeing the national debt as a simple pile of money we owe and started seeing it for what it truly is: a complex ledger of our nation’s history, a reflection of our priorities, and a systems-engineering challenge of the highest order.

It is a journey to find a new perspective, one that moves beyond the tired, unproductive debates and offers a new language to understand one of the most significant and misunderstood issues of our time.

It seeks to answer the central mystery: Is the national debt a ticking time bomb, a harmless accounting entry, or something else entirely?

---

Part I: The Labyrinth of Flawed Metaphors

Chapter 1: The Household Analogy: Why Your Country Isn’t Your Family Budget

The conversation about national debt almost always begins in the same place: the kitchen table.

The household analogy is the most powerful and persistent metaphor in public finance.

Its appeal is visceral.

We are told that a government, like a family, cannot perpetually spend more than it earns without courting disaster.⁷

The image is of a credit card balance growing ever larger, a mortgage that can never be paid off, a legacy of financial ruin left to our children.⁵

This narrative is simple, it feels intuitive, and it is the cornerstone of a political rhetoric that frames fiscal policy as a matter of simple, homespun morality: thrift is good, profligacy is bad.

The problem is that this analogy is not just an oversimplification; it is fundamentally, dangerously wrong.

A sovereign government that issues its own currency is nothing like a household, and pretending it is obscures the real nature of the debt and the real choices we face.

To build a true understanding, we must first dismantle this flawed foundation, point by point.

First, a government has a potentially infinite lifespan.

A family must manage its finances within the finite working lives of its members, aiming to pay off debts before retirement.⁹

A government, however, is a perpetual entity.

It doesn’t retire.

It can roll over its debt indefinitely, issuing new bonds to pay off old ones, a practice that would be disastrous for an individual but is standard operating procedure for a nation.⁹

Second, a government has ultimate control over its own revenue in a way no household ever could.

A family’s income is largely determined by external employers and market forces.

A government, by contrast, has the sovereign power of taxation.

It can, by law, increase its income to meet its obligations.¹⁰

This power is not unlimited—politically or economically—but it represents a fundamental difference in kind from a household’s fixed salary.

Third, and most crucially, the U.S. government can create the very currency needed to pay its debts.

A household that runs out of dollars cannot simply print more in the basement.

The U.S. Treasury, in coordination with the Federal Reserve, can create U.S. dollars at will.¹⁰

This does not mean that debt is without consequence—as we will see, the true constraint is inflation—but it means the concept of “running out of money” or involuntary bankruptcy that haunts a household simply does not apply to a monetarily sovereign nation.

Finally, the nature of the creditor is entirely different.

A household owes its mortgage to an external Bank. A significant portion of the U.S. national debt, however, is owed to itself.

As of 2025, about 20% of the debt is “intragovernmental,” meaning it is owed by the Treasury to other government trust funds like Social Security.¹²

Of the remaining “debt held by the public,” a majority is owned by domestic individuals, corporations, pension funds, and the Federal Reserve.¹³

When the government pays interest on this domestic debt, it is largely a transfer from U.S. taxpayers to U.S. bondholders—a payment from one pocket of the national economy to another, not a payment sent out of the country.⁷

The persistence of this flawed analogy is not accidental.

It serves a powerful political and psychological purpose.

By framing a complex economic issue as a simple moral tale of fiscal discipline, it shortcuts nuanced debate.

It suggests that the only responsible action is to cut spending and reduce the debt, regardless of the economic context or the purpose of the borrowing.

It prevents us from asking more important questions, such as whether the debt was incurred to fight a war, survive a recession, or invest in the nation’s future.

To have a real conversation, we must leave the kitchen table behind and enter the world as it Is.

Characteristic	Household	Sovereign Government (like the U.S.)
Lifespan	Finite (e.g., 80 years)	Perpetual
Revenue Source	External (wages, salary)	Internal (taxation, currency creation)
Debt Objective	Primarily consumption and asset acquisition (home, car)	Economic policy (stimulus, investment, war funding)
Relationship to Creditors	Almost entirely external (banks, lenders)	Largely internal (citizens, domestic institutions, other government agencies)
Primary Constraint	Solvency (running out of money)	Inflation (devaluing the currency)

Chapter 2: The Doomsday Clock: A History of Unfulfilled Prophecy

Once you discard the household analogy, the history of the national debt begins to look very different.

The public narrative is one of a relentlessly ticking doomsday clock, with each new trillion-dollar milestone pushing us closer to an economic apocalypse.

This has been the story for decades.

In 1992, businessman Ross Perot made the rising national debt a centerpiece of his independent presidential campaign, warning of a looming crisis.

At that time, the net debt was 48% of GDP—a level that seems almost quaint compared to today’s figure of over 120%.⁵

Throughout the 2000s and 2010s, warnings grew more shrill as the debt surpassed $10 trillion, then $20 trillion.

Headlines breathlessly announced that the U.S. had hit $34 trillion in January 2024, $35 trillion just a few months later in July, and $36 trillion by November of that year—each trillion being added in a shorter and shorter time frame.³

The Congressional Budget Office, which in 2020 had projected the debt wouldn’t pass $37 trillion until after 2030, saw that milestone reached years ahead of schedule due to pandemic-related spending.³

Yet, the prophesied crisis never arrived.

The U.S. has carried debt since its inception, starting with over $75 million from the Revolutionary War.⁵

The debt-to-GDP ratio reached its all-time high of over 106% in 1946, immediately following the massive expenditures of World War II.¹³

What followed was not collapse, but the greatest period of economic expansion in American history.

During the prosperous post-war decades, the ratio steadily fell, not because the debt was paid off in absolute terms, but because the economy grew faster than the debt.¹³

Despite the debt growing in absolute terms for all but four years since 1980, the nation has apparently felt no catastrophic ill effects.¹⁵

Interest rates, for much of this period, remained historically low, and investors, both foreign and domestic, continued to view U.S. Treasury bonds as the safest asset in the world.⁵

This profound disconnect was the source of my professional frustration.

The standard models and dire warnings did not fully explain the resilience of the system.

The doomsday clock kept ticking, but midnight never came.

It suggested that we were measuring the wrong thing, or at least, interpreting our measurements through the wrong lens.

The problem wasn’t just the household analogy; the entire public framework for assessing risk seemed fundamentally flawed.

It became clear to me that if I was ever to truly understand the national debt, I needed a completely new way of thinking about it.

---

Part II: The Epiphany – National Debt as Societal Technical Debt

Chapter 3: A Lesson from an Unlikely Place: How Software Engineers Taught Me About Public Finance

My breakthrough came from a place I never would have expected: a conversation with a friend who leads a software engineering team at a major tech company.

She was complaining about her team’s struggle with “technical debt.” I was intrigued by the term.

She explained that technical debt, a concept first articulated by developer Ward Cunningham, is a metaphor for the long-term consequences of short-term software development choices.²⁰

When building software, she said, you often face a trade-off.

You can do it the “right” way—clean, elegant, and robust—which takes more time.

Or you can do it the “quick” way, taking shortcuts to release a feature faster.

That shortcut is the technical debt.

You’ve shipped the feature, but you’ve created an underlying mess in the code that will make every future change slower and more difficult.

You are, in effect, paying “interest” on that initial shortcut in the form of reduced productivity and increased complexity, until you eventually go back and “refactor” the code to pay down the “principal”.²⁰

As she spoke, it was as if a floodlight had been switched on in my mind.

This was it.

This was the framework I had been missing.

The national debt wasn’t a simple pile of money.

It was a form of societal technical debt.

The analogy clicked with startling clarity.

It wasn’t about the size of the debt; it was about its quality and the trade-offs it represented.

Some national debt is like a deliberate, strategic decision to ship a critical feature—like the massive borrowing during World War II to defeat fascism, or the stimulus spending in 2008 and 2020 to prevent a global economic meltdown.²

This is “good” debt, taken on knowingly to achieve a vital, time-sensitive goal.

But other debt is like the slow accumulation of “code rot” from years of neglect.

It’s the debt that piles up not from a single, strategic choice, but from a persistent failure to update legacy systems—like refusing to reform the funding structures of Social Security and Medicare as demographics and healthcare costs have changed.²²

This is “bad” debt, the kind that creates a persistent drag on the system, making every future policy decision more constrained and expensive.

This new metaphor didn’t make the problem smaller, but it made it legible.

It transformed the national debt from an incomprehensible, terrifying number into a complex but understandable systems-engineering challenge.

It gave me a new language to distinguish between wise investments and costly neglect, and to explain the real, tangible “interest payments” we make every year in the form of reduced fiscal flexibility and crowded-out priorities.

Chapter 4: The New Framework: A Glossary for Our National “Codebase”

The “National Debt as Technical Debt” framework is more than just a passing metaphor; it provides a new analytical lens with its own vocabulary.

To apply it consistently, we need to define our terms.

If we think of our country’s fiscal and legal structure as a vast, complex software system, we can build a glossary to navigate its “codebase.”

• The National “Codebase”: This is the entire body of laws, regulations, government programs, and physical infrastructure that constitute the operations of the nation. From the tax code to the interstate highway system, from Social Security to the military, this is the complex system our debt finances and is embedded within.
• Strategic Debt (Good Debt): This is debt incurred knowingly and deliberately to achieve a specific, high-value outcome that is expected to yield returns greater than its cost. This is analogous to a company taking out a loan to build a new factory or Uber raising $2 billion in debt because it was a cheaper source of capital than diluting shareholder equity.²³ For a nation, this includes borrowing to win a necessary war, to fund infrastructure projects that boost long-term productivity, or to provide stimulus during a severe recession to prevent a deeper, more costly collapse.²⁵ It is a calculated trade-off.
• Unintentional Debt (Bad Debt): This is the “debt” that accumulates from neglect, political paralysis, and poorly designed policies. It is the fiscal equivalent of “code rot” or building on a shaky foundation.²⁶ This debt arises from structural deficits—persistent mismatches between spending commitments and revenue streams. The failure to adjust Social Security and Medicare for an aging population is the primary example. The program’s “code” was written for a 20th-century demographic reality, and the failure to “refactor” it for the 21st century results in a continuous, compounding accumulation of unintentional debt.²
• “Interest Payments” as System Drag: The interest the government pays on its debt is the literal “interest” on our accumulated technical debt. As of fiscal year 2024, net interest payments were projected to be $879.9 billion, consuming 13% of all federal expenditures—more than was spent on Medicare or national defense that year.¹² This is the tangible cost of past decisions. It represents a constant drag on our system’s performance, reducing our capacity to do new things. Every dollar spent servicing old debt is a dollar that cannot be invested in education, research, or responding to the next crisis.¹⁵
• “Refactoring” as Policy Reform: In software, “refactoring” is the process of restructuring existing computer code—changing the factoring—without changing its external behavior. The goal is to improve nonfunctional attributes of the software, such as readability, complexity, and maintainability. In our fiscal analogy, “refactoring” is the hard, politically unglamorous work of reforming the underlying policies that generate unintentional debt. It’s not about eliminating Social Security (“deleting the feature”), but about adjusting its parameters (e.g., retirement age, benefit formulas, tax contributions) to make it sustainable for future generations. It is the essential maintenance that prevents the entire system from becoming brittle and slow.

This framework shifts our focus away from the headline-grabbing stock of debt (the total dollar amount) and toward the flow of new debt and, more importantly, the quality of the policies that create it.

It forces us to stop asking the simplistic question, “How big is the debt?” and start asking the more sophisticated and useful questions: “Why are we borrowing?” and “Is this borrowing creating future value or future drag?”

---

Part III: Deconstructing the Debt Machine (Applying the New Framework)

Chapter 5: The Anatomy of a Trillion-Dollar Line Item

Armed with our new framework, we can now dissect the national debt without fear.

The total figure, often cited as a single monolithic number, is actually composed of two very different types of obligations, and understanding the distinction is critical.²

First, there is Debt Held by the Public.

This is the portion of the debt that the government has borrowed on the open market by selling Treasury securities—bills, notes, and bonds—to individuals, corporations, state and local governments, foreign governments, and the Federal Reserve.¹³

As of early 2025, this figure stood at roughly $29 trillion.¹³

In our analogy, this is the “real” debt.

It’s like a company taking out a loan from a bank or issuing corporate bonds.

It represents a genuine claim by external parties on the government’s future resources.

The interest on this debt must be paid out of tax revenues or further borrowing.

This is the component of the debt that directly impacts financial markets and interest rates.

The second, and more misunderstood, component is Intragovernmental Debt.

This is the money that the U.S. Treasury owes to other parts of the federal government.

As of early 2025, this amounted to over $7 trillion.¹³

The vast majority of this is held by government trust funds, primarily the Social Security and Medicare trust funds.¹²

For decades, these programs collected more in payroll taxes than they paid out in benefits.

By law, these surpluses were invested in special, non-marketable Treasury securities.¹³

The public hears “debt” and imagines a loan that must be repaid.

But intragovernmental debt is fundamentally different.

It is an asset on one government ledger (the Social Security Administration) and a liability on another (the Treasury).

The net effect on the government’s overall financial position is zero.²⁵

Using our technical debt framework, we can see this clearly.

Intragovernmental debt is not a loan; it is an

internal accounting mechanism.

It is a giant “comment in the code,” a bookkeeping entry that tracks the government’s promise to pay future benefits.

The real issue is not the bonds themselves, but the long-term, unfunded spending commitments they represent.

The problem is a flaw in the system’s architecture—the mismatch between future promises and future revenues—that needs “refactoring,” not a present solvency crisis that needs immediate repayment.

This distinction is crucial because lumping these two very different concepts together inflates the headline debt number and creates unnecessary panic.

Chapter 6: A History of Our “Technical Debt”

Viewing American history through the lens of technical debt transforms it from a simple timeline of rising numbers into a qualitative story of strategic choices and deferred maintenance.

We can perform a “narrative audit” of the major events that have shaped our national ledger.

The nation was born in Strategic Debt.

The $75 million borrowed to finance the Revolutionary War was the price of liberty itself.²

Similarly, the debt incurred during the Civil War, which grew from $65 million in 1860 to $2.7 billion by 1865, was a strategic investment in preserving the Union.²

These were existential crises where borrowing was not a choice but a necessity.

The most dramatic example of strategic debt came during World War II.

The debt skyrocketed from $51 billion in 1940 to $260 billion after the war, pushing the debt-to-GDP ratio to its all-time high.¹⁶

This massive borrowing was a deliberate, strategic decision to fund the industrial mobilization required to defeat fascism.

The investment paid off spectacularly.

The war effort pulled the country out of the Great Depression and laid the groundwork for decades of unprecedented economic growth, which allowed the U.S. to easily manage and reduce the debt-to-GDP ratio in the post-war years.¹³

The creation of The Great Society programs like Medicare and Social Security in the 1960s represents a more complex case.

The initial goal was strategic: to provide a social safety net and reduce poverty among the elderly.

However, these programs have since become the primary source of Unintentional Debt.

Their “code” was written for a demographic and economic reality that no longer exists.

As lifespans increased and healthcare costs soared, the failure of successive Congresses to “refactor” these programs by adjusting their funding mechanisms has led to the accumulation of massive, unfunded long-term liabilities.²²

The Reagan Era in the 1980s marked a significant shift.

For the first time during a period of relative peace and prosperity, the debt began to climb sharply.

The combination of significant tax cuts and increased military spending created a structural deficit—a classic example of accumulating unintentional debt by creating a permanent mismatch between revenues and expenditures.¹³

More recently, the responses to the 2008 Financial Crisis and the COVID-19 Pandemic were clear instances of strategic debt.

The trillions borrowed for programs like the Troubled Asset Relief Program (TARP) and the CARES Act were emergency measures—a “hotfix” deployed to prevent the entire economic system from crashing.²

While the long-term consequences are still being debated, the immediate goal was to avert a far greater economic catastrophe.

Event/Era	Key Drivers	Debt Classification	Long-Term Impact on “System Health”
Revolutionary & Civil Wars	War financing, national survival	Strategic	Established the nation and its credit; a necessary investment in existence.
World War I & II	Massive military mobilization	Strategic	Pushed debt-to-GDP to all-time highs but also spurred industrial growth that powered post-war prosperity.
The Great Society (1960s)	Creation of Social Security & Medicare	Mixed (Strategic & Unintentional)	Achieved key social goals but created long-term structural deficits due to a failure to “refactor” for changing demographics.
Reagan Years (1980s)	Tax cuts, increased defense spending	Unintentional	Created the first large structural deficits during peacetime, setting a new baseline for borrowing.
2008 Financial Crisis	Bank bailouts, economic stimulus	Strategic	An “emergency patch” to prevent a global financial meltdown, averting a deeper depression.
COVID-19 Pandemic	Relief checks, business loans, vaccine development	Strategic	Massive, rapid borrowing to stabilize a shuttered economy and support public health.

Chapter 7: The Ultimate Metric: Is Debt-to-GDP the “Code Coverage” of an Economy?

If the absolute size of the debt is a misleading metric, how should we measure a nation’s fiscal health? For economists, the most important indicator is the debt-to-GDP ratio.²

This metric compares the total national debt to the country’s Gross Domestic Product (GDP)—the total value of all goods and services produced in a year.¹⁷

Expressed as a percentage, it provides a measure of the government’s ability to make future payments on its debt.

A country with a large economy (high GDP) can handle a much larger absolute debt than a country with a small economy.

It is the best way to compare a country’s debt burden over time and against other nations.²

In our new framework, the debt-to-GDP ratio is like “code coverage” in software testing.

Code coverage is a metric that measures the percentage of a program’s source code that is executed when a particular test suite is R.N. A high code coverage percentage is generally desirable, as it suggests that more of the code has been tested.

However, it is not a guarantee of quality.

You can have 100% code coverage and still have a buggy, poorly designed program.

Similarly, the debt-to-GDP ratio is a vital sign, but it is not the whole story.

A low ratio is generally better than a high one, but context is everything.

Japan, for example, has a debt-to-GDP ratio well over 200%—far higher than that of the U.S.—yet it has shown no signs of default because its debt is almost entirely held domestically and denominated in its own currency, the yen.³⁰

Conversely, a country with a much lower ratio could face a crisis if its debt is owed in a foreign currency it cannot print, or if its economy is stagnant and unable to generate the growth needed to service the debt.

Economists have long debated whether there is a “tipping point” or danger zone for this ratio.

A widely cited 2010 study by the World Bank suggested that a debt-to-GDP ratio that exceeds 77% for a prolonged period can begin to have a negative impact on economic growth.¹⁵

It is worth noting that the U.S. ratio has been consistently above this level since the first quarter of 2009.¹⁷

However, there is no magic number that automatically triggers a crisis.

The ratio is a crucial diagnostic tool, but it must be read alongside other indicators, such as the interest rate on the debt, the rate of economic growth, and the political stability of the country.

It tells us the size of the burden relative to our capacity to carry it, but it doesn’t tell us about the

quality of the debt or the wisdom of the policies that created it.

For that, we need our more nuanced framework.

---

Part IV: The Great Debates – Clashing Architectures of Economic Thought

The national debt is not just a number; it is an idea.

And for centuries, different schools of economic thought have fought over the nature of that idea.

These are not just academic squabbles; they represent fundamentally different blueprints for how a national economy should be designed and managed.

Using our technical debt analogy, we can understand these clashing philosophies as competing views on system architecture.

Chapter 8: The Classical Architects: “All Debt is Bad Code”

The first major school of thought, known as Classical economics, emerged in the 18th and 19th centuries with thinkers like Adam Smith and David Ricardo.

Its central belief is that economies are largely self-regulating systems that function best with minimal government interference.³¹

To the Classical architect, the ideal system is clean, efficient, and balanced.

Government debt is seen as an unnatural and harmful distortion.

The primary critique from the Classical school is the concept of “crowding out”.³²

The theory posits that there is a finite pool of savings in an economy.

When the government borrows money to finance a deficit, it must compete with private businesses for these limited funds.

This increased demand for savings drives up interest rates, making it more expensive for private companies to borrow and invest in new factories, equipment, and jobs.

In effect, public debt “crowds out” productive private investment.³³

In our analogy, this is like the government’s bloated, inefficient “legacy code” hogging all the system’s memory and processing power, leaving no resources for innovative new applications to R.N.

A second, more controversial tenet is the theory of Ricardian equivalence.

Attributed to David Ricardo but more formally developed by modern economist Robert Barro, this theory argues that government debt may have no effect on the economy at all.¹⁸

The logic is that rational taxpayers understand that debt issued today must eventually be repaid with higher taxes in the future.

In anticipation of this, they will increase their savings to cover that future tax liability, completely offsetting the government’s attempt to stimulate the economy through borrowing.

For the Classical school, the conclusion is clear: government budgets should be balanced.³³

Debt is “pernicious,” a drag on the natural progress of the nation toward wealth.

It is “bad code” that should be avoided whenever possible and eliminated quickly when it appears.

Chapter 9: The Keynesian Engineers: “Borrow to Build, Refactor in the Boom”

The Great Depression shattered the Classical view of a perfectly self-regulating economy.

In its place rose a new philosophy, pioneered by British economist John Maynard Keynes.

Keynesian economics is the philosophy of the pragmatist, the engineer in the trenches who knows that elegant theories sometimes fail in the face of harsh reality.³⁵

Keynes argued that during a severe recession, economies can get stuck in a vicious cycle of low demand, low investment, and high unemployment.

The private sector, gripped by pessimism, is unable to fix itself.

In these moments, the government must step in.³⁵

The core of Keynesianism is

counter-cyclical fiscal policy: during bad times, the government should actively run a deficit by increasing spending and cutting taxes to boost aggregate demand and jolt the economy back to life.³⁷

This spending, Keynesians argue, is amplified by a

multiplier effect, where each dollar of government spending creates more than a dollar in total economic activity as it changes hands.³⁶

However, there is a crucial second half to the Keynesian prescription, one that is often conveniently forgotten by politicians.

Keynes argued that during good economic times—the “boom”—the government should do the exact opposite.

It should run a budget surplus by raising taxes or cutting spending to cool down an overheating economy and, critically, to pay down the debt it accumulated during the crisis.²³

In our analogy, Keynesians are the pragmatic software engineers.

When the entire system is crashing (a recession), you don’t worry about writing perfect code.

You do whatever it takes to get the system back online, even if it means deploying a “quick and dirty patch” (taking on strategic debt).

A good engineer, however, knows that this is a temporary fix.

They have a responsibility to go back later, during a period of stability, and “refactor”—to clean up the messy code and pay down the technical debt to ensure the long-term health of the system.

The Keynesian tragedy in modern politics is that we have become very good at the first step (borrowing in a crisis) but have lost the discipline for the second (paying it down in good times).

Chapter 10: The MMT Radicals: “The System Compiles Its Own Resources”

A more recent and highly controversial school of thought has entered the debate: Modern Monetary Theory (MMT).

If Classical economists are minimalist architects and Keynesians are pragmatic engineers, MMT proponents are radical systems designers who believe the fundamental constraints of the system have been misunderstood.³⁸

The starting point for MMT is the unique status of a monetarily sovereign government.

A government that issues its own fiat currency, like the U.S., can never involuntarily go bankrupt or “run out of money.” It can always create the currency it needs to pay any debt denominated in that currency.³⁹

Therefore, MMT argues, the government is not financially constrained like a household or a business.

For MMT theorists, the true limit on government spending is not the size of the deficit or the debt, but the real productive capacity of the economy.

The government can and should spend to achieve public purposes like full employment or a green energy transition, and the only real constraint is inflation.³⁸

Inflation occurs when government spending pushes total demand beyond the economy’s ability to produce goods and services—too much money chasing too few goods.

In this view, taxes do not “fund” government spending.

The government, as the currency issuer, spends money into existence first.

The primary purpose of taxes is to create demand for that currency (you need dollars to pay your taxes) and, more importantly, to act as the main tool for controlling inflation by removing excess money from the private sector.³⁸

In our analogy, MMT architects see the economic “computer” as having essentially infinite processing power (money).

The government doesn’t need to “earn” or “borrow” this power; it creates it.

The only real constraint is the system “overheating” (inflation).

The job of fiscal policy is not to balance a budget, but to manage resource allocation to keep the system running at full capacity without overheating.

MMT has faced fierce criticism from mainstream economists.

Critics argue that its prescriptions would likely lead to runaway inflation, that it underestimates the political difficulty of raising taxes to fight inflation, and that it ignores the risk of currency devaluation in a globalized world.⁴⁰

Some have labeled it a “luxury belief,” an elegant theory that sounds appealing to insulated elites but whose consequences—particularly high inflation—would fall most heavily on the poor and working class.⁴¹

Economic School	Core View of Debt	Primary Risk	Proposed Solution	“Technical Debt” Analogy
Classical	A harmful distortion that reduces private investment.	Crowding Out: Public borrowing raises interest rates and displaces private sector growth.	Balance the budget; minimize debt.	All debt is “bad code” that slows down the system. The goal is a perfectly clean, minimalist codebase.
Keynesian	A necessary tool for managing economic downturns.	Inaction during a Recession: Failing to use debt to stimulate a stalled economy.	Run deficits during recessions; run surpluses during booms to pay down debt.	Debt is a “strategic patch” to fix a crashing system. It’s acceptable, but must be “refactored” (paid down) later.
Modern Monetary Theory (MMT)	An accounting record of money the government has added to the economy; not a true constraint.	Inflation: Spending beyond the economy’s real productive capacity.	Spend as needed for public purpose; use taxes to control inflation.	The system “compiles its own resources” (money). The only limit is “overheating” (inflation), not an arbitrary debt counter.

---

Part V: Managing Our National “Codebase”: A Path Forward

Chapter 11: Identifying the Real Risks: From System Drag to a Full-Blown Crash

The technical debt framework allows us to move beyond vague fears of a “debt crisis” and identify the specific, tangible risks that a high and rising debt poses to our national “codebase.” These risks are not hypothetical; they are real-world constraints that impact our economy and our government’s ability to function.

The most immediate and certain risk is the “Interest” Problem, which I call System Drag.

As the national debt grows, and as interest rates rise from their historic lows, the cost of servicing that debt consumes an ever-larger portion of the federal budget.⁵

In fiscal year 2024, net interest payments became the third-largest category of federal spending, surpassing both Medicare and national defense.¹²

This is the direct cost of our accumulated technical debt.

It acts as a relentless drag on our fiscal capacity.

Every dollar spent on interest is a dollar that cannot be used to fund scientific research, repair bridges, strengthen our military, or respond to the next pandemic.¹⁵

This isn’t a future crisis; it’s a present-day constraint that gets tighter every year.

A more severe, though less certain, risk is the “Loss of Confidence” Problem, which could lead to a Market Crash.

U.S. Treasury bonds are considered the bedrock of the global financial system because investors believe there is virtually zero risk that the U.S. will default on its obligations.⁵

If, however, investors—both foreign and domestic—begin to doubt the U.S. government’s ability or political willingness to pay its debts, they would demand much higher interest rates to compensate for the perceived risk.

A sudden spike in interest rates would not only make government borrowing prohibitively expensive but could also trigger a global financial crisis, as the value of existing bonds plummeted and financial institutions that rely on them were destabilized.¹⁹

The periodic, self-inflicted political standoffs over the

debt ceiling are a dangerous flirtation with this exact scenario.

By threatening not to pay bills already incurred, policymakers risk shattering the full faith and credit of the United States, which is the nation’s single most valuable financial asset.⁵

Finally, there is the “Inflation” Problem, or System Overload.

If the government finances its deficits not by borrowing from the public but by having the central bank create new money (a process sometimes called monetizing the debt), and if the economy is already operating at or near its full capacity, this can lead to high inflation.⁴⁰

With more money chasing the same amount of goods and services, prices are bid up across the board.

This erodes the purchasing power of savings and wages, acting as a hidden tax that disproportionately harms lower-income households and those on fixed incomes.¹⁹

This is the “overheating” scenario that MMT correctly identifies as the ultimate constraint on a monetarily sovereign government.

Chapter 12: A Pragmatist’s Guide to “Refactoring” the Federal Budget

So, how do we manage our national “codebase”? The political debate often presents a false binary: either draconian austerity (“slash spending”) or massive tax hikes.

The technical debt framework, however, points toward a more nuanced, surgical approach: we must “refactor” the parts of our fiscal code that are generating the most unintentional debt.

This means targeting the “code smells”—the structural inefficiencies in our budget.

The primary drivers of the long-term debt trajectory are not discretionary programs like foreign aid or education; they are the mandatory spending programs, chiefly Social Security and Medicare.²²

These programs are on an unsustainable path not because they are inherently bad, but because their “code” was written for the demographic and medical realities of the mid-20th century.

“Refactoring” these programs means making intelligent, often politically painful, adjustments to bring their long-term costs in line with long-term revenues.

This could involve gradually adjusting the retirement age, modifying the benefit growth formula, or changing the way the programs are financed.

The goal is not to eliminate these popular and vital programs (“deleting the feature”), but to ensure their structural integrity so they can function for generations to come.

At the same time, a smart engineer doesn’t just fix bugs; they invest in tools and infrastructure that make the entire system faster and more powerful.

Similarly, a wise fiscal policy doesn’t just focus on cutting; it makes strategic investments in areas that boost long-term economic growth.

Spending on infrastructure, basic scientific research, and education can increase the nation’s productivity.¹³

This is how we grow the denominator of the debt-to-GDP ratio.

Taking on “good debt” to finance these kinds of investments can be one of the most effective ways to improve our long-term fiscal health, as the returns in the form of higher GDP and tax revenue can far exceed the cost of the borrowing.

It is crucial to be honest about the impossibility of easy solutions.

The numbers are simply too large.

We cannot “grow our way out” of the problem without also making policy changes.⁴⁴

We cannot solve it by eliminating “waste, fraud, and abuse” or by cutting the budgets of small agencies.⁴⁴

Nearly 70% of federal spending goes to Social Security, healthcare, defense, and interest on the debt.⁴⁴

Any serious plan must address these areas, as well as the revenue side of the ledger.

The greatest obstacle to this kind of pragmatic “refactoring” is not economic, but political.

The American political system is brilliantly designed to deliver concentrated, short-term benefits (new spending programs, popular tax cuts) while imposing diffuse, long-term costs (the slow accumulation of debt).

The “refactoring” we need requires the opposite: imposing concentrated, short-term costs (through benefit adjustments or tax increases) to achieve diffuse, long-term benefits (fiscal stability).

This is a profound misalignment between the engineering logic required to maintain a healthy system and the political logic of short-term electoral cycles.

Our national “technical debt” continues to accumulate because the “product managers” in Congress are incentivized to keep shipping popular but unsustainable “features.”

---

Conclusion: From Fear to Agency – Becoming Better Stewards of Our Shared Ledger

I began this journey as an economist paralyzed by the national debt—a concept I understood professionally but could not grasp viscerally.

The public narrative of fear, driven by the flawed household analogy, left me without a useful story to tell.

The debt was an amorphous, terrifying monster, its incomprehensible size a barrier to rational thought.

The discovery of the “technical debt” framework changed everything.

It did not make the numbers smaller or the political challenges easier, but it made the problem legible.

The monster was given a name and an anatomy.

The framework transformed the debt from a source of existential dread into a complex but manageable systems-engineering challenge.

It provided a language to distinguish between strategic investment and costly neglect, between an emergency patch and the slow rot of deferred maintenance.

This new perspective is, I believe, a tool for empowerment.

Armed with this framework, we, the public, can escape the tyranny of the trillion-dollar headline.

We can move beyond the unproductive shouting matches and start asking the right questions.

When a politician proposes a new spending program or a tax cut, we can ask: Is this a strategic investment that will strengthen our national “codebase,” or is it an unfunded promise that will add to our “unintentional debt”? Are we “refactoring” our legacy systems like Social Security and Medicare to make them resilient for the future, or are we allowing the “interest payments” of our past neglect to consume our present and future?

Managing the national debt is the ongoing work of stewarding a complex adaptive system.⁴⁵

It is not a problem to be “solved” once and for all.

There is no mythical “debt zero” to which we can or should return.

The real goal is to be wise and responsible engineers of our own collective enterprise.

It requires foresight, a willingness to make difficult trade-offs, and, most importantly, a shared language to debate those trade-offs intelligently.

The nation’s ledger is not just an accountant’s record; it is the story we are writing about ourselves.

By learning to read it with clarity instead of fear, we reclaim our agency in the writing of the next chapter.

Works cited

1. Budget and Economic Data | Congressional Budget Office, accessed August 13, 2025, https://www.cbo.gov/data/budget-economic-data
2. National Debt: Definition, Impact, and Key Drivers – Investopedia, accessed August 13, 2025, https://www.investopedia.com/updates/usa-national-debt/
3. US Debt Reaches $37 Trillion Years Before Expected – Newsweek, accessed August 13, 2025, https://www.newsweek.com/us-government-federal-debt-taxes-budget-economy-2112581
4. Committee for a Responsible Federal Budget, accessed August 13, 2025, https://www.crfb.org/
5. Understanding the National Debt | U.S. Treasury Fiscal Data, accessed August 13, 2025, https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
6. US Government Debt Crisis: A Simplified Explanation of America’s Financial Dilemma, accessed August 13, 2025, https://www.nasdaq.com/articles/us-government-debt-crisis-simplified-explanation-americas-financial-dilemma
7. The Government Is Not a Household: A Long-Term Perspective on a Bad Metaphor, accessed August 13, 2025, https://scholarship.miami.edu/esploro/outputs/blog/The-Government-Is-Not-a-Household/991031801621002976
8. Government debt – Wikipedia, accessed August 13, 2025, https://en.wikipedia.org/wiki/Government_debt
9. What the National Debt Means to You – Investopedia, accessed August 13, 2025, https://www.investopedia.com/articles/economics/10/national-debt.asp
10. US National Debt Crisis Simplified! 🙂 : r/funny – Reddit, accessed August 13, 2025, https://www.reddit.com/r/funny/comments/kdac6/us_national_debt_crisis_simplified/
11. Government-Household analogy – Wikipedia, accessed August 13, 2025, https://en.wikipedia.org/wiki/Government-Household_analogy
12. Key facts about the U.S. national debt | Pew Research Center, accessed August 13, 2025, https://www.pewresearch.org/short-reads/2025/08/12/key-facts-about-the-us-national-debt/
13. National debt of the United States – Wikipedia, accessed August 13, 2025, https://en.wikipedia.org/wiki/National_debt_of_the_United_States
14. Debt-to-GDP ratio – Wikipedia, accessed August 13, 2025, https://en.wikipedia.org/wiki/Debt-to-GDP_ratio
15. National Debt – The American Leader, accessed August 13, 2025, https://theamericanleader.org/problems/national-debt/
16. History of the Debt – TreasuryDirect, accessed August 13, 2025, https://treasurydirect.gov/government/historical-debt-outstanding/
17. Debt-to-GDP Ratio: Formula and What It Can Tell You – Investopedia, accessed August 13, 2025, https://www.investopedia.com/terms/d/debtgdpratio.asp
18. Government Debt | Harvard University, accessed August 13, 2025, https://scholar.harvard.edu/files/mankiw/files/govdebt.pdf
19. What are the risks of a rising federal debt? – Brookings Institution, accessed August 13, 2025, https://www.brookings.edu/articles/what-are-the-risks-of-a-rising-federal-debt/
20. As a metaphor and practice, technical debt is holding us back – Computers & People, accessed August 13, 2025, https://computersandpeople.com/technical-debt-is-holding-us-back/
21. A Financial Analogy for Technical Debt – AKF Partners, accessed August 13, 2025, https://akfpartners.com/growth-blog/understanding-techical-debt
22. Explainer: US National Debt – The Conference Board, accessed August 13, 2025, https://www.conference-board.org/publications/explainer-us-national-debt
23. ELI5: how would keynesian economists tackle the national debt crisis – Reddit, accessed August 13, 2025, https://www.reddit.com/r/explainlikeimfive/comments/1en1cfj/eli5_how_would_keynesian_economists_tackle_the/
24. 3 Wildly Successful Companies Who Use Debt to their Advantage – Billd, accessed August 13, 2025, https://billd.com/blog/debt-success/
25. The national debt: How and why the US government borrows money, accessed August 13, 2025, https://journalistsresource.org/economics/public-debt/
26. Has anyone applied the metaphor of “technical debt” to the question “is innovation slowing down? : r/slatestarcodex – Reddit, accessed August 13, 2025, https://www.reddit.com/r/slatestarcodex/comments/qtudcr/has_anyone_applied_the_metaphor_of_technical_debt/
27. Debt to the Penny | U.S. Treasury Fiscal Data, accessed August 13, 2025, https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/
28. TreasuryDirect KIDS – The History of U.S. Public Debt – The 1950s to 1980s, accessed August 13, 2025, https://www.treasurydirect.gov/kids/history/history_1950-1980.htm
29. U.S. National Debt by Year – Investopedia, accessed August 13, 2025, https://www.investopedia.com/us-national-debt-by-year-7499291
30. Debt-to-GDP Ratio – Overview, Formula, Example – Corporate Finance Institute, accessed August 13, 2025, https://corporatefinanceinstitute.com/resources/economics/debt-to-gdp-ratio/
31. Classical Economics: Definition and History – Investopedia, accessed August 13, 2025, https://www.investopedia.com/terms/c/classicaleconomics.asp
32. Debt & Deficits: Economic and Political Issues – Boston University, accessed August 13, 2025, https://www.bu.edu/eci/files/2020/06/Debt-and-Deficits_Final-1.pdf
33. (PDF) Classical Economists and Public Debt – ResearchGate, accessed August 13, 2025, https://www.researchgate.net/publication/225830266_Classical_Economists_and_Public_Debt
34. NATIONAL DEBT BURDEN AND RICARDIAN EQUIVALENCE Dmitriy Maslov* – 1. Introduction. The main material research, accessed August 13, 2025, http://vsed.oneu.edu.ua/collections/2015/59/pdf/96-100.pdf
35. Keynesian Economics: Theory and Applications – Investopedia, accessed August 13, 2025, https://www.investopedia.com/terms/k/keynesianeconomics.asp
36. What Is Keynesian Economics? – Back to Basics Compilation Book – IMF Finance & Development magazine, accessed August 13, 2025, https://www.imf.org/external/pubs/ft/fandd/basics/4_keynes.htm
37. Deficit Spending: Definition and Theory – Investopedia, accessed August 13, 2025, https://www.investopedia.com/terms/d/deficit-spending.asp
38. Modern monetary theory – Wikipedia, accessed August 13, 2025, https://en.wikipedia.org/wiki/Modern_monetary_theory
39. What Is Modern Monetary Theory (MMT)? – Investopedia, accessed August 13, 2025, https://www.investopedia.com/modern-monetary-theory-mmt-4588060
40. How Reliable Is Modern Monetary Theory as a Guide to Policy? – Mercatus Center, accessed August 13, 2025, https://www.mercatus.org/research/policy-briefs/how-reliable-modern-monetary-theory-guide-policy
41. The Debt Delusion: Why Modern Monetary Theory Is a Luxury Belief | Cato at Liberty Blog, accessed August 13, 2025, https://www.cato.org/blog/debt-delusion-why-modern-monetary-theory-luxury-belief
42. MMT and Government Finance: You Can’t Always Get What You Want | Richmond Fed, accessed August 13, 2025, https://www.richmondfed.org/publications/research/economic_brief/2021/eb_21-12
43. Economics and the 2008 crisis: a Keynesian view: Keynes and government debt | OpenLearn – Open University, accessed August 13, 2025, https://www.open.edu/openlearn/society-politics-law/economics-and-the-2008-crisis-keynesian-view/content-section-6.7.3
44. Five myths about federal debt – Brookings Institution, accessed August 13, 2025, https://www.brookings.edu/articles/five-myths-about-federal-debt/
45. Complex adaptive system – Wikipedia, accessed August 13, 2025, https://en.wikipedia.org/wiki/Complex_adaptive_system