Summary
The United States federal government carries a negative net position of roughly $41.7 trillion: the accumulated deficits of the past, rolled over by refinancing and never truly repaid. This stock of past debt keeps serving as the rationale for tax increases. The existing means of dealing with it all reduce, in the end, to repayment by taxation. That path rests on the mistaken placement of public welfare and property rights side by side, on the same level, and it has never once eliminated a debt excess.
This paper proposes a mechanism to repay that accumulated deficit in full, in a United States version. The federal government issues a digital asset — the Government Net Asset Token — with no dividend, no redemption and no voting rights. Because the issuing government bears no obligations, sale proceeds are not debt: they increase net assets, exactly as a share issue increases a company’s capital. The increased net assets are then used for actual repayment, by redeeming maturing Treasuries without refinancing them. In addition, a conversion mechanism (token-convertible Treasuries) lets holders exchange bonds for the token at market price; exchanged bonds are extinguished and the debt excess shrinks by that amount.
The countable effect is capped by the token’s market capitalisation. Converting the full conversion pool of about $26 trillion requires a market capitalisation above roughly $65 trillion to take hold. Section 5 sets out condition-based milestones for the repayment: no dates are promised, and attainment is verifiable in published figures. No government currency is introduced and the monetary system is untouched. What the design can commit to is providing a mechanism for the full repayment of the debt excess. Attaining full repayment itself depends on the premium taking hold and on fiscal management.
1. The problem
1.1 What the debt excess is
The debt excess is the accumulated deficit as settled in the financial statements. At the end of fiscal 2025 (30 September 2025), federal assets were about $6.06 trillion, liabilities about $47.78 trillion, and net position about −$41.7 trillion. The Federal Reserve’s net assets are only in the tens of billions, so consolidation barely changes the picture.
This debt excess consists, in its entirety, of debt that carries an obligation to repay. A bond is a loan. Refinancing is not repayment: issuing new bonds to redeem maturing ones changes the form of the debt and reduces the accumulated deficit by not one dollar. The government’s debt has been rolled over indefinitely, but it has never truly been repaid.
The size of the debt excess is not a measure of the government’s ability to pay. The taxing power does not appear on the balance sheet. But that is no reason not to repay. Views holding that government debt need not be repaid do not face the fact that the debt excess consists of repayment-obligated borrowing, and this paper does not side with them. Left unrepaid, the debt excess will keep being used as the rationale for tax increases; the inference “the debt excess leaves no choice but to raise taxes” holds only while no mechanism of repayment exists.
The problem lies less in the size of the amount than in the role this debt excess plays. The public is made to bear an open-ended burden for the deficits of the past. While the debt goes unrepaid, this structure does not change.
A state rests on formal legitimacy. Without it, a state is no different from an armed organisation. If the state’s borrowing is the premise backing the credibility of the state’s money, then that premise — the borrowing — can be repaid by replacing it with another premise consonant with that form. To repay through form is not to refrain from repaying. It is to turn the formally settled accumulated deficit into a surplus, through a mechanism that observes the form.
1.2 The existing means cannot repay it
The means ordinarily proposed for repaying the accumulated deficit are three: tax revenue (higher taxes and spending restraint), growth-driven revenue, and repayment by money issuance. Repayment by higher taxes and spending restraint passes for the orthodox road to fiscal consolidation, and tax increases have been justified by exactly this reasoning. But for all their different shapes, they arrive at the same place. Spending restraint and growth-driven revenue alike process the debt through a burden on the public, and repayment by money issuance is a tax in the form of inflation. The standard solutions, in other words, amount to one thing: repaying the debt with taxes.
And repaying the debt with taxes has problems of its own, at the root.
First, the correspondence between benefit and burden, and the question of property rights. Taxes are properly collected to pay for the public services of their own time. Consider self-government by membership fees. In an American homeowners’ association or a condominium association, the members estimate what the upkeep of the common areas and the shared services cost, and collect assessments to share that cost. The fees are legitimate because the service received and the burden borne correspond, and the residents can decide the use of the money through their meetings. But suppose the association announced: “We have to repay the deficits run up by past officers — and for that, the residents will have to lower their standard of living,” and began compulsorily collecting fees beyond the cost of the services. What would that be? It would no longer be the price of a service. The residents never consented to the making of that deficit, and they received no service corresponding to it. Such a fee is a levy infringing the residents’ property rights. Taxes have the same structure. The portion that matches the cost of public services can be called a price; the portion collected beyond it, to repay the deficits of the past, is not a price at all. Today’s citizens did not consent to that borrowing, and they are not the beneficiaries of that past spending. With no correspondence between benefit and burden, something like a property-infringing fee is being collected compulsorily, under the name of tax.
Here, the relation between public welfare and property rights must itself be set right. In the conventional interpretation, property rights and public welfare are treated as concepts of the same level of abstraction, standing side by side under the Constitution. That placement is what sets them against each other. A structure of conflict arises — “protect property rights by sacrificing public welfare,” or “protect public welfare by sacrificing property rights” — and with it a standing contest between those who would put property rights first and those who would put public welfare first. Worse, under that structure, the property rights of those who legislate and administer are amply protected, while the property rights of ordinary people are the ones threatened. The error in the concepts’ inclusion relations is a cause of real conflict.
This paper corrects the inclusion relations. The Constitution encompasses property rights — property rights are a fundamental human right, guaranteed by the Fifth Amendment, which provides that no person shall be deprived of property without due process of law and that private property shall not be taken for public use without just compensation (the taxing power rests on Article I, Section 8) — and property rights encompass public welfare. Public welfare is a part of property rights as a fundamental human right. To encompass means that the lower concept stands only where it satisfies the conditions of the concept that encompasses it. Whatever claims the name of public welfare must therefore satisfy the conditions of property rights. A “public welfare” realised by infringing property rights does not hold together as a concept; the very phrase “sacrifice property rights to protect public welfare” is a mistake.
On this interpretation, limiting property rights is to be justified not only for the costs of the present public sphere but for the repayment of past debts as well. But to tax to the point of impoverishing today’s taxpayers, sharply cutting their disposable income, stagnating the economy and sacrificing the multiplier effect is to put the cart before the horse. Such taxation does not satisfy the conditions of property rights, and it does not deserve the name of public welfare. This paper adopts this as its interpretation of property rights.
Second, the scale is unworkable. To repay a debt excess of roughly $41.7 trillion out of tax revenue would burden generations. A burden with no term is not a repayment plan; it is the permanent imposition on the public of a forced “donation” for the deficits of the past.
Third, history shows it does not happen. The federal debt was last paid off in 1835; what has continued ever since is not repayment but refinancing and accumulation. Even in the surplus years of the late 1990s, the debt excess did not disappear. Repayment by taxation, however often preached, has never once eliminated a debt excess.
Fourth, tax increases for repayment chill the economy and erode the very base of revenue. The heavier the burden, the weaker the capacity to repay — a contradiction built into the solution itself.
Nor is the no-need-to-repay view an answer: leave the debt unrepaid, and the pressure to “repay it with taxes” remains.
In short, repaying the debt with taxes shifts who pays, away from those who borrowed, and leaves only the burden with today’s public. It is not a design for repayment; it is a design for burden. The proposal here is a fourth path, none of the above: install credit in a new asset that is nobody’s liability as the premise of repayment.
1.3 The proposal
The proposal has two elements: a token issued by the federal government as an asset imposing no obligations on its issuer (the Government Net Asset Token), and a bond mechanism permitting exchange into that token (token-convertible Treasuries). Issuance is administered by the Treasury. No government currency is introduced.
2. Design
2.1 An asset in a third category
The token is made neither gold, nor shares, nor currency. Gold has no issuer, and a token with an issuer cannot take gold’s seat. It is given none of the rights definitive of shares — no dividend, no voting rights, no residual claim. Nor is it made a currency. The token is designed as a third category: an issued asset that creates no obligations for its issuer.
In the United States, the opposite design is being written into law. Payment stablecoins under the GENIUS Act must hold full reserves and redeem at par, which makes them liabilities by design. This token has no redemption and falls outside that regime.
The five design requirements:
- No issuer obligations: no dividend, no redemption, no voting rights, no residual claim. What the holder receives is the asset itself, and nothing else
- Scarcity: total supply has a statutory cap, and buyback-and-burn may reduce the actual outstanding amount below it
- No counterpart liability (accounting): sale proceeds are recorded as an increase in the government’s net assets, not as a liability. An issuer (the government) nonetheless exists — in this the token differs from gold, which has no issuer
- Its value rests on the monetary premium alone: it is priced only insofar as it is widely recognised as a scarce asset, not by redemption or interest
- Self-custody is possible: as an asset on a distributed ledger, it can be held without going through the issuer
2.2 Specification
- Issuer: the federal government (issuance administered by the Treasury)
- Total supply: 100 trillion tokens (cap), fixed in the enabling statute; raising it requires legislation. Burns reduce the actual outstanding amount below the cap
- Initial offering price: $0.01 per token. Thereafter the price forms freely in the market. $0.01 is an initial sale price, not a peg
- No price-support promises of any kind (no redemption, no guaranteed buybacks of price, quantity or occurrence). The moment a promise is made, an obligation arises and the token’s nature is destroyed. Discretionary government buyback-and-burn is provided separately, as a policy that creates no rights for holders (Section 3.4)
- Retention: the government retains 40% of total supply as a conversion delivery pool. The government’s own holdings are not recorded as assets (the treatment of treasury shares). The remaining 60% is the saleable portion
- Rights: no dividend, no redemption, no voting rights, no residual claim
- Legal tender status: none. Existing dollars perform pricing and settlement
3. Mechanism
3.1 Sales, and repayment out of net assets
The government sells the token to the public for dollars. The proceeds are recorded as an increase in the government’s net assets. Proceeds of financing that carries no repayment obligation become net assets by the same principle by which a share issue increases a company’s capital; there is no classificatory fiction here. The entry is: Dr Cash T / Cr Net assets T.
The proceeds are used, in principle, to redeem Treasuries. Maturing Treasuries are redeemed with the proceeds, and to that extent no new debt is issued to refinance them. Refinancing only changes the form of the debt; this redemption reduces the outstanding debt itself. On the accounting side, it is the increase in net assets created by the sale that makes redemption without borrowing possible — this is what it means to repay debt out of net assets. The reduction of the debt excess occurs at the moment of the sale; the redemption changes the composition (less cash, less debt) and does not create the effect twice.
3.2 Conversion
Newly issued Treasuries may carry a clause making them eligible for conversion into the token (token-convertible Treasuries).
- The conversion rate is the market price at the time of conversion; the number of tokens delivered is face amount ÷ market price (e.g., at a market price of $0.10, 10 tokens are delivered per $1 of face). No fixed rate is set
- Conversion is an equal-value exchange at market price, so no arbitrage gain arises from conversion itself. A holder’s motive to convert is expectation of price appreciation or portfolio choice
- Conversion is by government exchange offer; holders are given no statutory conversion right
- Delivery is made from the government’s retained pool (40%). The pool is the government’s own holding and is not recorded as an asset, so the delivery itself requires no entry
- A converted Treasury is extinguished (Dr Treasuries X / Cr Net assets X). Because the counterparty is outside the public sector, net position improves genuinely by the converted amount, and interest on it ceases
The conversion pool is the Treasuries held by the public (about $30 trillion) excluding Federal Reserve holdings (about $4–5 trillion), i.e. about $26 trillion; Fed-held Treasuries are intra-public-sector and are not conversion targets. The convertible amount is capped by the pool’s market value (0.4 × market capitalisation): $0.4 trillion at a price of $0.01, $4 trillion at $0.10, and $26 trillion at $0.65. Because delivery is priced at market, price appreciation directly expands the face amount that can be extinguished. Under a fixed rate, the extinguishable face amount would be capped by the pool’s token count however high the price rose, and the difference would become excess profit for converting holders. It is for this reason that the design’s scale is entrusted to the market.
3.3 Where the effects arise
Because the issuer is the government itself, the effects of sales and conversion arise directly on the government’s balance sheet. Under a design in which a separate institution issues the token, the effects would arise first in that institution’s net assets and reach the government only through consolidation. This design has no such intermediate step.
3.4 Supply management: buyback-and-burn
- Actor: the federal government, as issuer. The government may buy back its own tokens in the market and burn them
- Discretion: buybacks are at the government’s discretion. Holders cannot demand them
- No promises: the government promises nothing as to price, quantity or occurrence. A promised buyback approaches redemption, creates an obligation, and destroys the obligation-free nature of the asset (Requirement 1)
- Purpose: the purpose of burns is to raise the per-token scarcity value that new issuance — the increase in the circulating float through sales and conversion deliveries — has diluted. Issuance and burns are a pair of valves managing the circulating supply
- Funding: limited to real revenue. The principal source is the interest savings on Treasuries extinguished by conversion. No buybacks funded by borrowing. Funding buybacks out of the sale proceeds themselves would offset the increase in net assets from those sales by the same amount, which is a further reason to place the funding in real revenue
- Accounting: a buyback reduces cash and reduces net assets by the buyback amount (Dr Net assets B / Cr Cash B, as with a share buyback). The burn itself is a transfer within net assets and is entry-neutral
- Indicative scale: with $400 billion of Treasuries converted at an average rate of 3%, the interest saving is about $12 billion a year; even if the whole of it were spent on buybacks, at a price of $0.01 it would retire only about 1.2% of total supply per year. The higher US rate makes the saving larger than in Japan
Buyback-and-burn does not by itself improve the debt excess, because it reduces net assets. Its role is to lever, through price support, the pool’s conversion capacity and the value of the unsold portion. For example, with a float of 30 trillion tokens at $0.01, a $12 billion buyback retires about 4% of the float. For the buyback to justify itself, the price must rise by more than about 4%; a 20% rise expands conversion capacity from $400 billion to $480 billion. The higher US interest rate turns the cycle — savings, buyback, price support, conversion capacity — faster than in Japan.
3.5 The classification authority
In the United States, the authority over the classification that records sale proceeds as net assets is the Federal Accounting Standards Advisory Board (FASAB). The classification argued here rests on the substance — the token imposes no obligations on its issuer — and on the share-issuance principle; it is not settled standards, and a standards process alongside legislation will be needed.
4. Propositions
Proposition 1 (genuineness of sales). Sale proceeds carry no liability and increase the government’s net assets by the same amount. Because the issuer bears no obligations, the increase is not a liability disguised as a promise of future expenditure.
Proposition 2 (genuineness of conversion). On conversion, the Treasury is extinguished and the debt excess shrinks by the converted amount. The exchange is at equal value, so no transfer of value occurs. The economic source of the reduction is the monetary premium that has taken hold in the token.
Proposition 3 (buybacks do not themselves improve; leverage only). Buyback-and-burn does not by itself improve the debt excess (it reduces net assets by the buyback amount). Its effect is limited to leverage, through price support, on conversion capacity and the value of the unsold portion. It has meaning only under this limitation, with funding placed in real revenue centred on interest savings from conversion.
Proposition 4 (cap on the effect). The effect countable with certainty is the sum of the sold portion (up to 0.6 × market capitalisation) and the converted portion (up to 0.4 × market capitalisation), and does not exceed the market capitalisation. The unsold portion and the remainder of the pool are the government’s own holdings, not recorded as assets, and are not counted in the effect.
5. Milestones of repayment
Repayment under this mechanism actually occurs through two routes: applying sale proceeds to the redemption of maturing Treasuries without refinancing them (Section 3.1), and extinguishment by conversion (Section 3.2). The stages below are not promises of dates. They are condition-based milestones, conditioned on the market capitalisation and on cumulative implementation; whether each has been reached can be verified by anyone from published figures.
Baseline (end of fiscal 2025): net position about −$41.7 trillion; conversion pool about $26 trillion; annual interest about $1 trillion; average rate about 3%.
| Stage | Condition | Cumulative effect | Net position | Annual interest saving |
|---|---|---|---|---|
| M0 System live | Enacting statute; first offering held | — | ≈ −$41.7tn | — |
| M1 Repayment begins | Sales of $10bn; proceeds applied to maturing redemptions (no refinancing) | $10bn | ≈ −$41.69tn | ≈ $0.3bn |
| M2 Small scale | Sales and conversion totalling $30bn | $30bn | ≈ −$41.67tn | ≈ $0.9bn |
| M3 Medium scale | Market cap of $5tn takes hold; sales $0.5tn + conversion $1tn | $1.5tn | ≈ −$40.2tn (about 3.6% smaller) | ≈ $30bn on the converted portion |
| M4 Expansion | Market cap $20tn; implementation within conversion capacity $8tn and sales capacity $12tn | Up to $20tn | Up to ≈ −$21.7tn | ≈ $240bn on $8tn converted |
| M5 Full-scale reduction | Market cap $40tn; conversion capacity $16tn | Example: sales $9tn + conversion $16tn = $25tn | ≈ −$16.7tn | ≈ $480bn on $16tn converted |
| M6 Full conversion in reach | Market cap above ≈ $65tn takes hold (pool 0.4M ≥ $26tn) | Conversion of $26tn becomes possible | ≈ −$15.7tn | ≈ $780bn on the converted portion |
| M7 The remainder | At M6 levels, sales capacity (0.6M, ≈ $39tn) exceeds the remainder | In theory, the remaining ≈ $15.7tn can also be redeemed out of sale proceeds | Repaid in full in theory | — |
The hard condition in the US version is M6. The market capitalisation required, about $65 trillion, is more than twice that of physical gold (about $30 trillion) and comparable to the entire equity market — a harder condition than in the Japanese version (about one third of gold). M7 is a computed endpoint, not a promise.
Implementation follows the same pattern at each stage: at M0, the enacting statute and the accounting classification, conversion clauses on new issues, and the first offering; at M1, the first redemption without refinancing, published as such; at M2, the first conversions and the start of buyback-and-burn funded by interest savings; at M3, confirmation of the reduction in the federal financial report. From M4 on, the pace is set by whether the price takes hold, not by a plan.
The following indicators are published at each stage: (1) tokens outstanding and cumulative burns; (2) cumulative sales, and cumulative redemptions funded by sale proceeds (of which the amount not refinanced); (3) cumulative conversions and cumulative interest savings; (4) buyback amounts and the breakdown of their funding; (5) the trend of net position in the federal financial report. It may be said that repayment has occurred only when the cumulative totals in (2) and (3) match the improvement in (5). Attainment is judged on the cumulative reduction attributable to the token, and is not to be confused with year-to-year movements from fiscal operations.
6. Safeguards
- Statutory fixing of the supply cap and the pool ratio: both are set in the enabling statute, and changing them requires legislation
- Congressional control of implementation: sales, conversion and buybacks are carried out under statute and budget
- Market dilution: even with supply fixed, releasing too quickly drops the price, and conversion capacity and funding power destroy themselves — a self-limiting mechanism
- Never promising buybacks: a promise would create an obligation and destroy the token’s nature itself
The safeguard that existed in a design issued by a separate institution — the independent institution’s judgment — does not exist under government issuance. The safeguards are replaced by statute and congressional control, and are weaker for it. This is stated openly.
7. Positioning against precedents
- The WLFI (World Liberty Financial) governance token carries no economic rights, has a fixed supply, and is actually priced and traded in the market — a working example that a monetary premium can take hold in an obligation-free token. This paper’s offering price ($0.01) likewise follows the fact that WLFI’s actual sale prices were cent-scale. The present token takes that design, makes the government its issuer, and connects a conversion mechanism to government bonds
- Redeemable stablecoins (including GENIUS Act payment stablecoins) carry full reserves and par redemption and are therefore liabilities; they do not increase net assets. This token stands at the opposite pole, in having no redemption
- A dividend-bearing equity-security token, so long as its dividends are funded by refinancing, is no different from a bond whose interest has changed form, and has no independent cash flow. This token has no dividend
8. Risks
- Price volatility is large, and if the monetary premium does not take hold, the effect remains at the initial scale of tens of billions of dollars (around M2 in the milestones)
- A US-specific issue is the scarcity of safe assets. Treasuries are the core safe asset of the world, and removing them from the market in large quantities could worsen the supply of safe assets and Treasury-market liquidity. Conversion is voluntary and proceeds in stages, but this consideration weighs heavier than in the Japanese version
- Because market expectations of buybacks become part of the price, stopping buybacks can cause the price to fall in reaction. Disclosure is needed so that buybacks are not mistaken for a price guarantee
- Because the issuer is the government, the token is liable to be seen as “government financing itself”. Confidence in the supply cap is the core of demand
9. Legal issues
- Enabling statute: issuing the token, fixing the supply cap and the pool ratio in statute, and the non-recognition of the government’s own holdings as assets require new legislation. The Treasury’s existing authority concerns the issuance of debt; issuing an obligation-free asset requires extending legislation
- Securities law: a token with no dividend, redemption or voting rights fits awkwardly within traditional definitions of a security, but the Howey analysis depends on the facts. It is not a GENIUS Act payment stablecoin, having no redemption. This needs to be settled as the design is finalised
- Debt limit: conversion reduces debt subject to the limit (31 U.S.C. §3101). This paper does not propose using the mechanism as a tool in debt-limit negotiations; the two are treated independently
- Accounting classification: as in Section 3.5, a FASAB process is needed
10. Conclusion
This proposal does not cancel debts. Individual Treasuries are serviced and redeemed as usual, or exchanged at market value at the holder’s option. What it addresses is the already-settled accumulated deficit — the residual on the balance sheet.
The source of the reduction is credit in an asset that is nobody’s liability: the monetary premium. It replaces repayment by taxation — the path that goes on taxing in the name of public welfare without satisfying the conditions of property rights. If the state’s borrowing is the premise backing the credibility of the state’s money, then installing a new credit as the premise repays the borrowing. The milestones in Section 5 show the stages through which that repayment proceeds, and the figures by which it is verified. The purpose of the design is the full repayment of the debt excess, and what it can commit to, as a system, is providing the mechanism for that repayment. The scale and pace of repayment are entrusted to the market, and its preservation to fiscal management.
The same mechanism can also be applied locally, and is designed separately as the town-and-gown concept, in which a municipality issues a token to secure its budget and circulates the funds through its region in partnership with a university.
The debt is not unrepayable. The mechanism of repayment simply did not exist. That mechanism can be designed.