The United States has crossed a fiscal milestone that would have seemed unimaginable to earlier generations: $40 trillion in gross federal debt.
One response is to look backward. In a recent guest essay in The New York Times, Paul Vigna invoked the Sumerian term amargi (also rendered amagi) and the associated practice of rulers canceling private debts. He urged America to consider the same remedy for its modern debt.
Amagi, however, is not a settled one-word synonym for “debt cancellation.” Its literal translation is “return to the mother.” It has been described as one of the earliest written expressions of liberty, but its precise meaning is unclear. Subsequent scholarship connected the term to freeing people held in compulsory service for tax debts, allowing them to return to their families. Larry Arnhart reads amagi broadly: release from debt servitude, lower taxes, restored property, fewer bureaucratic controls, and “freedom under the law.” These readings suggest that amagi concerned emancipation from personal subordination and official abuse, not the cancellation of sovereign securities.
The analogy breaks down at the outset. Mesopotamian clean-slate edicts typically remitted agrarian and personal debts, tax arrears, and obligations to palace or temple institutions. They did not cancel a sovereign’s bonds to investors in anything resembling today’s Treasury market. Wiping out federal securities would be a different policy aimed at a different kind of debt.
In a later LinkedIn post, Vigna acknowledged the central historical problem. “Sovereign debt didn’t exist then,” he argued. His proposal is instead “a really broad, multinational way to reset the entire debt clock.” Yet he insists that it must occur “not in a way that wipes out the creditors.” He calls a “controlled implosion” preferable to waiting for what he sees as an inevitable collapse because the debt will never be paid off.
That qualification contains the proposal’s central contradiction. A government cannot zero out a liability while leaving the corresponding asset intact. Making creditors whole would require governments to redeem their bonds through taxes or asset sales; replace bonds with another government obligation; or pay creditors with newly printed money. Those alternatives amount to repayment, relabeling, and monetization, respectively, not erasure.
Monetization does not solve the contradiction. The Federal Reserve creates most new money by purchasing financial assets and crediting banks’ reserve accounts with new digital balances. A Treasury security becomes an asset on the Fed’s balance sheet, while the newly created reserves become its liability. Canceling the Treasury security would remove the Fed’s asset but leave the reserves it creates to purchase it outstanding. Nor does creating money create additional real resources. If the Fed creates more money than people want to hold, they spend the excess, bidding up prices and reducing the dollar’s purchasing power. Part of the obligation shifts to money holders, but it never disappears.
Making the plan multinational does not change the arithmetic. Governments could offset some debts they owe one another, but claims held by private investors and domestic public institutions would remain. A multinational agreement could not eliminate those securities without deciding who would absorb the losses or what equivalent assets would replace them. That allocation is the substance of the policy.
The claim that the debt will never be paid off also conflates the total stock of federal debt with the individual securities that compose it. Treasury securities mature and are redeemed continually, although the government often finances those payments by issuing new debt. Maintaining a debt stock is not the same as refusing to honor existing bonds. The problem is that persistent deficits cause debt and interest costs to outpace national income and federal revenues.
Nor is the choice limited to a global jubilee or passive acceptance of an inevitable collapse. Congress can change the spending, tax, and borrowing rules that generate structural deficits. A “controlled implosion” without an explicit mechanism for allocating the losses would just be an implosion, whether it took the form of default, inflation, or a compulsory exchange of one government claim for another.
Even if Washington could declare all $40 trillion canceled, Congress would still face the same incentives to promise more than it raises in revenue. Deficits would soon resume.
A debt jubilee would reset the clock without fixing it.
Nor would cancellation make the economic costs disappear. Treasury debt is a government liability and an asset held throughout the financial system. About $32.3 trillion of that debt is held by the public. This includes households, financial institutions, foreign holders, state and local governments, and the Federal Reserve. Another $7.75 trillion is held within the federal government, including by Social Security and other trust funds.
Canceling the first category would impose losses on private and public holders. Canceling the second would erase trust fund assets without erasing the benefit promises associated with them. The liabilities would not disappear; they would just move.
A jubilee of federal debt would also raise serious constitutional questions. Section 4 of the Fourteenth Amendment states that the validity of public debt authorized by law “shall not be questioned.” In Perry v. United States (1935), the Supreme Court rejected the idea that Congress may borrow on the nation’s credit and later “alter or destroy” its commitments.
The fact that money and credit are “social constructions” does not make their consequences imaginary. Contracts, property rights, and yield curves are social constructs, too. Changing the rules governing them can redistribute wealth, but it cannot make the underlying costs disappear.
Why should creditors or holders of dollars bear the cost of Washington’s failure to reconcile its spending promises with the revenue it collects?
Treasury securities play a central role in modern finance. They serve as investments, collateral, and benchmarks for other financial assets.
Their usefulness rests on the government’s reliability. If investors came to view Treasury promises as politically contingent, they would demand a premium for that risk or reduce their willingness to lend.
None of this means Americans should accept our present $40 trillion predicament. Instead, we must address the process that produced it.
The central problem is fiscal. Both parties face pressure to offer new spending without new taxes, and tax cuts without spending cuts. Borrowing postpones the tradeoff. Voters receive benefits now, and future taxpayers receive the bill.
America’s constitutional system recognizes that government power requires institutional constraints. Yet while the Constitution requires Congress to authorize taxes and spending, it places few effective limits on long-term debt accumulation. Congress can enact programs and tax cuts whose political benefits arrive immediately while their budgetary costs stretch across decades. The result is a system that makes borrowing easier than restraint.
The answer is a fiscal constitution that changes the incentives behind chronic borrowing through spending restraints and limits on government authority to prevent workarounds to budget rules. The details deserve debate. The principle is beyond dispute. Fiscal discipline cannot depend entirely on the self-restraint of politicians who benefit from deficit finance.
The harder question is whether America can establish institutions that prevent elected officials from repeatedly creating obligations without making the spending and revenue adjustments needed to honor them.
That is why the Sumerian example points toward a different lesson. Ancient rulers used debt cancellation to relieve political strain. Whatever its immediate benefits, a jubilee was an episodic remedy applied after obligations had become destabilizing, not an institutional rule preventing them from accumulating.
In addition, cumulative jubilees contributed to fiscal deterioration. A string of temporary exceptions, unfunded promises, or borrowed emergencies compounds strain over time. A civilizational collapse may appear sudden, but its causes accumulated over decades.
Recurring debt crises are evidence that the rules governing borrowing and repayment have failed. The durable solution is to make chronic deficit finance harder. America should learn from that warning without confusing that relief with wholesale repudiation of federal debt.
The United States needs a fiscal constitution, not fiscal amnesty.
