Eleanor Pringle and Fortune display dismal understanding of economics.

You might think, OK, hope, that Fortune Magazine economics writers would understand. . .  well . . .  economics.

Alas, Eleanor Pringle may have shattered any such hope.

“Eleanor Pringle is an award-winning senior reporter at Fortune covering news, the economy, and personal finance. Eleanor previously worked as a business correspondent and news editor in regional news in the U.K. She completed her journalism training with the Press Association after earning a degree from the University of East Anglia.”

Immediately, we sense a potential problem. Those words, “the economy and personal finance — do they hint that she doesn’t understand the difference between the federal government’s finance and personal finance?

Keep that question in mind as you read the following excerpts from her article in Foutune.

Two months into the new fiscal year, the US government is already spending more than $10 billion a week servicing the national debt. Uh, oh. What does Ms. Pringle mean by “servicing“? Is she talking about returning the principal or paying the interest? There is a difference.

To grasp the difference, she first must understand the fundamentals of Monetary Sovereignty, which she clearly does not.

If you are a regular reader, you know that federal  (Monetarily Sovereign) finances are very different from the monetarily non-sovereign finances of state and local governments, businesses and individuals.

I won’t go into the details here, because you readers know them, but for a refresher, read “Common Myths in Economics . . .”

Briefly:

1. The federal government has the unlimited power to create dollars merely by passing laws and pressing computer keys. It never can run short of dollars to pay interest or bills.
2. Given that power, the government never borrows dollars. It just makes new ones. Those T-bills, T-notes, and T-bonds do not represent borrowing. They are deposit accounts whose purpose is not to supply the government with spending money.
3. Instead, the purposes are to help the Fed control interest rates and to provide a safe place to store unused dollars.
4. The T-securities represent deposits into savings accounts, and paying off the misnamed “debt” (deposits) merely requires returning the dollars that are in those accounts. Returning dollars that already exist in accounts is not a burden on the government.
5. Finally, the “debt” (which is not debt) also is not a burden on taxpayers, because federal taxes do not pay for anything. Even if all federal tax collections totaled $0, the federal government could continue spending and paying forever.

If you buy a Treasury Bill, you will deposit your Federal Reserve Notes (aka, dollar bills) into your Treasury Bill account, and you will receive a Treasury Bill. It’s a simple dollar exchange — your Federal Reserve notes for Treasury bills, all of which are U.S. dollars.

To pay this off, the government simply reverses the process. It exchanges Federal Reserve Notes for Treasury Bills. No tax dollars are involved.

Your deposited dollars remain in your account until maturity, when they are returned. As for the interest, the federal government presses a few computer keys, and the interest dollars are added to your account and then, upon maturity, they are returned to you with the principal.

Unlike real debt, which burdens borrowers, this federal Treasury round-trip process imposes no burden on the federal government or taxpayers.

Ms. Pringle’s article continues:

The calendar year may have a few weeks left to tick off, but as far as the government’s budget is concerned, we’re in fiscal 2026. And in a matter of weeks, the Treasury has already paid out a 12-figure sum to service the nation’s debt.

Unlike the tax and calendar year, the government’s financial calendar runs to the end of September. According to Treasury data, in the nine weeks since, it has spent $104 billion in interest on its $38 trillion borrowing burden.

That’s more than $11 billion a week, and already represents 15% of federal spending in the current fiscal year.

Economists may be hopeful that the Treasury would make some New (fiscal) Year’s resolutions: Perhaps either scaling back its borrowing, and the additional interest rates on that debt as a result, or drumming up some meaningful revenue to offset the costs.

The federal government does not borrow, and the additional interest adds to Gross Domestic Product (GDP).

GDP = Federal Spending + Nonfederal Spending + Net Exports

President Trump and his cabinet have been discussing debt more meaningfully in this administration. While economists say some of their methods are “peculiar,” the Oval Office has nevertheless devised some money-making schemes, like tariffs, estimated to offset $3 trillion through fiscal year 2035.

This is, unfortunately, $1 trillion lower than previous estimates from the Congressional Budget Office (CBO) earlier this year.

A “money-making scheme” like tariffs simply is a money-transfer scheme that moves dollars from the private sector (aka “the economy“) to the federal government, which neither needs nor uses those dollars. The federal government creates new dollars, ad hoc, for every dollar it spends.

There’s also the issue of how much money will be left over to offset the debt from tariff revenue.

Tariffs do not “offset” T-securities. Unlike T-securities, tariffs are taxes taken from the economy. While T-securities are merely a savings device, tariffs impoverish the economy, drawing us toward recession.

Current estimations suggest that duties will bring in between $300 billion and $400 billion a year, which would help to pay a fraction of the yearly interest payments totaling more than $1 trillion in gross spending in 2025.

Those “$300 billion and $400 billion a year” are tax dollars, subtracted from the economy along with all other tax dollars.

However, President Trump has pledged to share proceeds from the tariff project with individuals, sharing a “dividend” of $2,000 per person. This, according to the Committee for a Responsible Federal Budget (CRFB), would cost $600 billion annually.

The “$2,000 per person is far less than the ongoing, year-after-year cost of the tariffs — a net loss for the economy. And it comes with a caveat: The reduction of federal support for healthcare.

While money is coming in to help rebalance the books (unless it has already been spent, and more, on tariff rebate cheques), government borrowing doesn’t appear to be slowing.

No books are being “rebalanced.” Tariffs drain the economy of dollars.

The ostensible purpose of tariffs is to protect American businesses and American jobs. This could be accomplished by additional government spending to support businesses and jobs, thereby growing the economy rather than punishing it, as tariffs do.

Last week, the Peterson Foundation, which lobbies for responsible fiscal action, published an analysis of the Treasury’s Quarterly Refunding process, which shares government borrowing expectations.

The foundation wrote that the government’s borrowing will increase, issuing $158 billion more in debt in the first half of this fiscal year than in the same period a year earlier.

The sentence should read, “Deposits into T-securities accounts will increase by $158 billion more in the first half of this fiscal year than in the same period a year earlier.” This is not a financial burden on the federal government or on taxpayers.

This demonstrates that the world is more reliant on the U.S. dollar than it was last year. It does NOT demonstrate that the federal government is indebted to anyone, or living beyond its means, or that future grandchildren will owe the “debt.”

And now for the focus on the fake, “sky is falling” scenario:

Debt is a key risk for 2026

Deutsche Bank is generally bullish. It expects global growth of 3.2% in 2026, with the U.S. economy projected to expand by 2.4%. Trade uncertainty is fading, which will boost growth, the bank added, with households also benefiting from tax cuts from Trump’s “One Big, Beautiful Bill” Act.

One small caveat. The line should read, “. . .  Rich households also benefiting from tax cuts from Trump’s ‘One Big, Beautiful Bill’ Act.” As for the poor and middle, who cares about them? Not Trump.

But deficits cast a shadow, on a global scale, over that rosy outlook. The institution wrote: “Many countries face high deficits with limited fiscal and monetary ability. The expected structural shift towards fiscal impulse in 2026 will further widen deficits and heighten concerns around ongoing debt sustainability issues.”

Add two words to the sentence, and it would be correct: “Many monetarily non-sovereign countries face high deficits with limited fiscal and monetary ability.” If monetarily non-sovereign countries like Germany, Italy, France, Portugal, et al face high deficits, they indeed have “limited fiscal and monetary ability.”

But if Monetarily Sovereign countries like the UK, Japan, China, and the U.S. face high deficits, their fiscal and monetary ability remains infinite.

I’d love to explain this to Ms. Pringle, but I suspect she would reject the notion that personal finances are diametrically opposed to federal finances.

In the U.S., in particular, fiscal risks are on the rise, the bank added: “We expect the 2026 deficit to reach 6.7%, with further widening if we see lower tariff revenues or more targeted fiscal stimulus that renews market concerns. Congress is also up against the clock to negotiate on healthcare subsidies and appropriations bills before the stopgap funding again expires on January 30.”

The government may also be banking on a shift of wealth over the next few decades, which could be leveraged to balance its bottom line.

The Great Wealth Transfer is expected to see $80 trillion change hands over the next 20 years, according to UBS. Some studies put that figure even higher, saying as much as $124 trillion will be passed down from older generations to their younger counterparts.

Wealth consistently transfers from older individuals to younger ones, as older individuals pass away and new ones are born. Viewing this as a problem seems ignorant at best and misleading at worst.

And this new flow of wealth represents an opportunity for tax revenue, UBS’s chief economist Paul Donovan believes. “Governments have long mobilized private wealth to support public finances,” he told a media briefing last month.

“There are several approaches. One is to influence market behavior—encouraging individuals to buy government bonds through incentives like tax-free premium bonds, which channel savings directly into state financing.

Suddenly, without warning, Ms. Pringle stops talking about federal debt and begins talking about state/local government debt.

The line, “Governments have long mobilized private wealth to support public finances,” refers only to monetarily non-sovereign state/local governments. The federal government does not use “private wealth to support public finances.”

Apparently, Ms. Pringle wishes to replace federal bonds with municipal bonds. She wants the federal government to raise taxes so that more (rich) people will buy federal tax-free state/local municipal bonds. This is a strange view. Increasing federal taxes will take more dollars out of the economy, while buying more municipal bonds helps add to state/local government (monetary non-sovereign) indebtedness.

Prudential regulation can also steer pension funds toward domestic government debt, as seen in the UK after 1945, when a debt-to-GDP ratio of 240% was successfully reduced over decades.”

The Debt-to-GDP ratio is the most useless calculation in all of economics. It shows nothing. See Myth #8 of “Common Debt Myths . . .” The ratio reveals nothing about a nation’s ability to service its debts, its financial strength, or anything else.

Anyone who uses the Debt/GDP ratio to demonstrate anything reveals a profound ignorance of national finances.

He added: “More contentious options exist, such as taxing wealth through capital gains or inheritance levies. In practice, the initial focus tends to be on financial repression—using tax incentives or regulation to direct money into government bonds—before moving toward wealth taxation.”

Any federal tax increase — ANY — is financial repression because dollars are taken from the economy and given to the federal government, where they cease to exist.

(Taxes are paid with dollars from the M2 money supply measure. When they reach the Treasury, they cease to exist in any money supply measure.)

The federal government does not spend tax dollars. Instead, it creates new dollars ad hoc.

State/local taxes stay in the economy, but they tend to be regressive, hitting the poor and middle much harder than the rich. For example, sales taxes are massively regressive, as are FICA and most real estate taxes.

The question is, “What is the real problem?”

High federal deficits and debt? These are not problems. They are additions to Gross Domestic Product.

Paying for federal projects? This is not a problem. The federal government can do this endlessly simply by voting to fund projects, and then creating the necessary dollars, ad hoc.

There are two problems that should be addressed:

1. How to support economic growth without negatively impacting the world.
2. How to reduce poverty, while narrowing the income/wealth/power Gap between the rich and the rest.

Rather than tilt at the windmill of phony federal “debt,” we should:

1 Eliminate FICA. It is a regressive tax that unfairly targets the lower- and middle-income workers, and contrary to popular myth, it doesn’t fund Medicare or Social Security. Like all federal taxes, it funds nothing.

The primary intent of FICA, as stated by President Franklin D. Roosevelt, was to deceive the public into believing they had funded their benefits. The idea was to deter politicians from cutting them. That has not worked.

The fact is that FICA limits benefits by creating a misleading ceiling through a fictitious “trust fund.“

Additionally, because FICA is a business expense, like all business expenses, it is passed on to consumers and thus is inflationary. Further, it discourages hiring by making employees more expensive and lowering net wages.

2. Tax-free Social Security for All, regardless of age, income, or wealth. Providing everyone with the same financial benefits would grow the economy, reduce poverty, and narrow the income/wealth/power Gap.

Receiving a $10,000 stipend, for instance, would improve the lives of the poor more than the middle class, and improve the middle class more than the rich.

3. Comprehensive, no-deductible Medicare for everyone, regardless of age, income, wealth, or health history.

4. Federal support for college attendance.

5. Federal, per-capita support for the monetarily non-sovereign states, allowing them to reduce their regressive taxes.

6. Targeted federal support for economically important businesses. Rather than levying tariffs, which are paid by American consumers, the federal government should support the same businesses financially, either through tax benefits or direct payments.

This would grow the economy and benefit consumers, and using taxes this way is part of one real purpose of federal taxation: controlling the economy.

In summary, understanding Monetary Sovereignty is the first step in understanding economics. Without that understanding, all commentary about the economy is useless.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

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MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY