As a rule, it does not matter how much money a country owes if it can easily meet its interest payments.
And the US will NEVER have a problem meeting its interest payments. Period.
So long as that is the case, bond investors are typically happy to continue lending money, and everything goes smoothly. It’s the same way you or I can carry a mortgage or credit card balance without triggering personal financial catastrophe, and without scaring away our bank. The United States, for its part, has managed to shoulder at least some debt continuously without major incident ever since 1835. And while this may frustrate men like Rand Paul, more rational people should take it as a sign that government borrowing, in and of itself, is not that scary. Currently, interest on the debt only takes up about 6 percent of the federal budget. As a percentage of GDP, it is lower than any time since the 1970s. In the future, we will only have to pay down enough debt to make sure our interest payments remain sustainable, as they are today. We will never have to eliminate the whole balance.
The US government creates the US dollar, therefore, it will NEVER, and I repeat, NEVER have a problem paying interest on the debt. Never. Never. Never. We are not Greece (Greece doesn’t have its own currency) and we are not Puerto Rico (again, Puerto Rico does not issue its own currency), we are the United States and the argument that our debt is too high, is like saying that the people of the United States have too much money.
Think about it. Every dollar that the US government creates and spends into the economy (contributing to the gov’t’s “debt”) is a dollar in OUR (the public’s) pockets. If the government doesn’t take that dollar away from us in taxes (runs a “deficit”) we get to keep the dollar. If the government DOES take away the dollar (i.e.: “pays off the debt”), we end up with NOTHING in our pockets.
It’s simple math. When will the public understand this?
Here are some tweets where it seems others might get it as well:
You actually need a special, pressure-resistant diving suit to reach these depths of stupidity https://t.co/apdjcoMNM7
— Jordan Weissmann (@JHWeissmann) April 14, 2016
The idea that the U.S. government is insolvent right now is so perniciously stupid. I can’t even.
— Matt O'Brien (@ObsoleteDogma) April 14, 2016
This cover is bad and it should feel bad https://t.co/CyFclIY8O1
— Dylan Matthews (@dylanmatt) April 14, 2016
I really thought we were done with this kind of silliness. https://t.co/XU28FjVU02
— JW Mason (@JWMason1) April 14, 2016