[0th_Place]

When people talk about US debt, they're not talking about something like your credit card bill. When the US needs to take on debt, they do it by issuing Treasury bonds.

These bonds are a contract saying that in exchange for your money today, the US government will pay you a fixed interest rate every month until the bond expires. In order to raise the money to pay off these fixed interest rates, the US government can either tax its citizens or issue more bonds.

For the past hundreds of years, our government has fulfilled its contracts and paid off the interest on all of its bonds. If we ever neglected to do so (AKA defaulted), it would be MUCH harder for our country to raise money in the future. Also, much of our government's debt is owned by American citizens, so we would be shooting ourselves in the foot, hurting domestic investors, and possibly causing a global economic crash.

That's what's making us pay, not some loan shark knocking on the White House door

[joejerryronnie]

In addition to the points you make above, having the world’s most trusted debt also helps to make the US dollar the world’s most stable currency, thus affording the US enormous influence in global fiscal policy. If contracts around the world started getting settled largely in Euros or Yuan, the US would find itself in a much less powerful position at the global negotiating table. As with most things in life, those who control the money have the power.

[tdsamardzhiev]

Well, obviously the US is not going to tell its creditors to go screw themselves. They'll just re-structure the debt in a less favorable for the creditor way. And the latter will agree to that because it has no better options.

[manquer]

That will still tank the economy.. creditors no longer have liquid funds and trust is gone. Any future bond issues will have very interest rates, while the debt now is not actually very large compared to gdp in the U.S and is quite serviceable, if the interest rates become high it will become difficult to service it causing runaway effects and future investments/spending will be hampered leading to all sorts of problems

[wbl]

We almost did that by accident a few years ago. It was not a good idea.

[heavenlyblue]

>> If we ever neglected to do so (AKA defaulted), it would be MUCH harder for our country to raise money in the future.

Really? Do the creditors have a better option?

[srtjstjsj]

Money isn't real. It is a promise to produce value. If the promise is broken, the alternative is to stop playing the game.

[heavenlyblue]

So if your whole wealth is in US dollars, how do you stop playing the game?