Tcherneva on Musk’s “Magic Money Computers”

There has been a lot of discussion about the birthright citizenship clause of the 14th Amendment recently. But there is another little-known clause that says that “the validity of the public debt of the United States, authorized by law … shall not be questioned.”

In this Roundtable discussion, Institute President Pavlina R. Tcherneva discussed how COVID relief was the most recent teachable moment about how the government pays for any federal program. The US embarked on wartime-level spending in just 12 months under both Republican and Democratic administrations and clearly demonstrated that the US government is self-financing and does not depend on borrowing or wealthy taxpayers to fund its expenditures. Elon Musk’s discovery of the so-called “magic money computers” shone light on how the US financial architecture was designed precisely to give the government monopoly powers over the issue of the currency, to ensure its solvency, and to guarantee the full faith and credit of its debts. Government payments are typically made via electronic means by issuing electronic payments on an as-needed basis, yes ex nihilo or “out of nothing”. As a practical matter, it is virtually impossible for the government to run out of cash. The drastic federal cuts by DOGE are politically motivated and have nothing to do with US government solvency.

Discussion starts at 1h04min: