James Grant may edit a publication with one of the all-time dry names– Interest Rate Observer–but he is a writer who is always interesting. Today's must-read is Grant's piece in Time headlined "The United States of Insolvency." It begins this way:

This much I have learned about debt after 40 years of writing and study: It is better not to incur it. Once it is incurred, it is better to pay it off. America, we have a problem.

We owe more than we can easily repay. We spend too much and borrow too much. Worse, we promise too much. We conjure dollar bills by the trillions–pull them right out of thin air. I won’t insist that this can’t go on, because it has. I only say that it will eventually stop.

I don’t know the date, but I believe that I know the reason. It will stop when the world loses confidence in the dollars we owe. Come that moment of truth, the nation will resemble Chicago, a once prosperous polity now trying to persuade its once trusting creditors that it is actually solvent.

Grant compares the government to a person who makes $54,000 a year but budgets for $64,000, planning to put the $10,000 on a credit card. A credit card company would not allow this and would tack on interest. With 15 percent fees, the debt would soon eat of 62 percent of your income. But, as Grant points out, the government is different: it has a central bank known as the Federal Reserve:

The Federal Reserve is the government’s Monopoly-money machine. It sets some interest rates and influences many others. It materializes dollars. It regulates–now regiments–the nation’s banks. It pulls levers to make the stock market go up.

Congress is the source of the Fed’s power. The Constitution is the source of Congress’s power. The parchment enjoins Congress to coin money and regulate the value thereof. The founders viewed money as a scale or yardstick, something that measures value. The Fed views money as a magic wand, something that creates value.

Dollars aren’t so much minted these days. Rather, they issue from the Fed’s computers in billowing digital clouds. The cost of producing them is only the energy expended on tapping the keys. The Fed emits these electronic greenbacks to attempt to control the course of economic events. It’s a heaven-sent monetary system for a big-spending government.

Unlike the individual who must struggle to pay debts, the Treasury, according to Grant, pays about 1.8 percent of that part of the debt held by savers and investors in the U.S. and abroad. Some of the government debt is to itself, and it's not that important that it pay on time. But much of the debt is to  public creditors who must be paid on time. When these creditors lose faith is the U.S. and her currency, we are going to be in for big trouble.

Grant has an interesting idea for reining in our destructive government spending: stop withholding payroll taxes. Taxes are so onerous that no doubt if they weren't withheld, many people would get in trouble. But we all would realize how much the government takes and we might even be moved to do something about government spending that costs us so dearly.

I bet Bernie Sanders' call for us to pay for the college educations of people we do not even know, whose potential or deservingness we thus can't begin to judge, would fall on deaf ears if we actually realized how much we pay now.