The US has many crises, but debt isn't on of them.
They go on to suggest that, in the US at least, taxes on labor can go a long way towards making the debt sustainable, while in Europe, neither taxes on labor nor taxes on capital will do much to make the public debt sustainable (since both are already high in Europe). Additionally, taxes on consumption can help in the US just as much as taxes on labor.
That's equivalent to 'but everyone else is doing it!' Our debt either is, or is not, sustainable.
IOW, you can not buy American debt. But you would instead buy Chinese, or EU, or Indian, or Russian. There is no "pure debt" to buy as an alternative (gold isn't the same).
Without real growth the debt will continue to grow, until more of the budget is devoted towards paying interest instead of the places its needed.
American growth is mediocre, but far less so than that of other developed nations. Europe is still scrambling to find ever-larger guns with which to blow its own feet off, Canada and Australia are realizing that building an economy on Chinese demand for resources is bound to end in tears, and the BRICS are suddenly looking much less lucrative.
The US is still the driver of the global economy, and is doing kind of okay while everyone else is a basket case.
Never mind the coming Demographic crisis, in Japan, China, almost all of the EU, Canada Australia and the US eventually as well, you're right we are better than most of those but all of those are hitting a brick wall
Money can always be printed, but not without consequences. (Just ask Germany or Zimbabwe).
So yes it is literally impossible for the US to default on that debt unless it actively chooses to, but that doesn't mean that we can just rack up arbitrary amounts of debt without any negative ramifications.
More important than creating money is having by far the biggest guns. What does it mean to be owed a "debt" by the person who controls the currency and most of the guns?
Yes, there are "consequences" to creating more money. Every act has consequences. If someone advises you to drink a lot of water, should I respond with counterexamples where someone drank from a firehose?
Additionally, the USA is unusual in that it is possibly the only economic powerhouse that is largely self-sufficient in most regards (raw materials, people, etc). We import most goods because they are more convenient, slightly cheaper or more tax advantageous to source elsewhere, not because we have to. One of the reasons the USA has tended to an isolationist attitude is because it could do so without much consequence. The world has much more to lose than we do should we should to inflate our way out of debt.
Hardly - the US could not maintain its current economy and standard-of-living as an autarky. The US is only able to maintain its current standard-of-living because of the massive amounts of work being down outside the country. Manufacturing in China is an easy example, but not the only one.
> The world has much more to lose than we do should we should to inflate our way out of debt.
Not really. Through a number of effects (both direct and indirect), if we were to try and inflate our way out of debt of this magnitude, we would tank our economy in the short- and medium-term, just the same way Germany, Zimbabwe, and Thailand did[0]. Those economies did recover in the longer run, but not without serious repercussions in between, and it can literally take multiple generations just to get back to the starting point, to say nothing of recovering the same global standing.
There is no way the US would want to regress to the sort of economy that this would involve. It would be a total economic disaster.
[0] This would be true even before we took into account the effect of no longer being the de facto global reserve currency (which would no longer be the case if we started printing hyperinflation-levels of money).
As it stands right now the US pays $430 billion a year on interest, which is less than we paid in 2008, despite adding over $9 Trillion to the National Debt in six and a half years.
https://www.treasurydirect.gov/govt/reports/ir/ir_expense.ht...
As of 2013, the national debt was $16.4 trillion; GDP was around $16.2 trillion, for a ratio of 102%. Developed countries with a higher ratio would be uh... Ireland, Italy, Greece, and Japan. Countries like Germany, Austria, Finland, New Zealand, Australia, Canada all have much lower ratios.
> What matters is not the total amount of debt, but rather the cost of maintaining it. And US Treasury bonds carry negative real interest rates.
Are you suggesting this is going to continue indefinitely?
I mean, come on. No, it will not continue indefinitely, but that is not the point. The rate of change and the feedback loops matter far more here than the sheer amount of "debt."
You are making a very, very different argument. Albeit one which is also pretty silly. The US is reliant on other countries providing it with very cheap finance, China most of all. The American military is strong, but it's not strong enough to force China to provide 0% loans. And that assumes that China even has the funds to do so; if China's economy has a major hiccup, then what? And you can't print your way out of a primary deficit, even if your debt is denominated in your own currency. This is very basic economics.
> The rate of change and the feedback loops matter far more here than the sheer amount of "debt."
Exactly. Hence the concern. Because if the US starts paying anything approaching its historical cost of debt for future borrowing, the feedback loop vicious. The only way for those feedback loops not to be activated is to argue that the US will continue to be offered ~0% loans indefinitely, which as you admit, they will not.
I'm open to the argument that the US's position is economically strong enough to weather the coming storm; I might even agree. But suggesting that there is no storm to weather (or that their debt-to-GDP ratio is not a source of weakness) is simply silly.
It's certainly true that Americans in general (and the US pension system in particular) hold a significantly larger share of US debt than, eg, China, but what of it? That makes the problem worse not better, because unlike Chinese citizens, American retirees can vote in US elections. :)
The cold reality is that 1) the US has a lot of debt relative to the size of the economy, 2) the debt continues to pile up, and 3) contrary to Cacti's argument, the US military is not a solution to this problem.
Classic.