| > The bill eventually comes due. No, it does not. The (e.g.) UK has, over its history, been in far "worse" financial shape than the US is or ever was. The UK was over 150% debt-to-GDP multiple occasions, as well as over 200%, and at one point (post-WW2) almost 250%: * https://en.wikipedia.org/wiki/File:UK_debt_as_GDP_percent.pn... * https://en.wikipedia.org/wiki/United_Kingdom_national_debt#M... There were times when just interest was 10% of GDP: * https://en.wikipedia.org/wiki/File:UK_National_Debt_interest... The UK has bonds dating back to South Sea Bubble crisis of 1720, the Napoleonic and Crimean wars, the Irish potato famine, and World War 1: * https://www.theguardian.com/business/2014/oct/31/uk-first-wo... And yet they've managed to survive and be a pretty decent place to live. Most of the economic troubles they've gone through were either global in scale (Great Depression, GFC) or self-inflicted (Gold Standard post-WW1 (too high a peg), Thatcherism, Brexit), that had little/nothing to do with debt. One does have to be mindful that debt servicing costs don't crowd out more important spending (education, health), but to think there's some magic number that causes issues has not been born out by the historical record; see Reinhart and Rogoff retraction: * https://archive.ph/PtwWF / https://www.newyorker.com/news/john-cassidy/the-reinhart-and... |
For Argentina, they were paying with money printing and that's why they had out of control inflation. So far the US is doing the same, and that's why inflation spiked. I think this is the long-term plan to finance the US debt. We're not going back to that 1-2% inflation. Probably 3-5% is the new normal.
I agree with you that there's no magic number of debt to GDP where things just fall apart. But there is certainly a number where they do. We don't know it, and it will be different for each country. Japan is sitting at 263% right now and doing OK (not great, but OK.)
Obviously debt weighs on future growth. This happens at the household level and at the company level and at the state level. That's well established.
The US right now is spending more on interest than defense. And that will keep rising. I'm not saying it will cause the US to fall. But between eroding the dollar through inflation, and weaponzing it aginst other countries - I think it will lose its status as a reserve currency. Not overnight, but I do expect to live to see it happen.