[alaxhn]

Generally sovereign debt is not a problem until creditors become worries that the debt will not be paid back. The exact threshold is subject to the regular market fear/greed manias and is not an exact figure. Once this happens the country issuing credit will have trouble lending at favorable rates and will be forced to choose between printing money (could lead to massive inflation) and making large cuts. Here is recent example: https://en.wikipedia.org/wiki/Greek_government-debt_crisis and here is an older more infamous one: https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R....

The sudden nature of these consequences without many real world impacts beforehand also happens at an individual level. It might be tempting to take on credit card debt at the moment and there might not be any real world consequences to running up the balance but if painful measures are not taken to address the situation before a moment of crisis (i.e. inability to service the debt), you are in for a world of pain.

[Krasnol]

National debt is not like credit card dept...at all. There is nobody coming to get your car if you don't pay up.

My god...this is such a common misunderstanding, they should use a different word already...

[hedora]

Well, if the government starts defaulting on payments, then bond rates go to infinity while the domestic currency goes to zero.

The US is currently defaulting on all sorts of debts, and the deficit has nothing to do with it. I wonder why its credit rating hasn’t been slashed yet.

[alaxhn]

The US is not defaulting on bond payments and thus bond interest rates have not increased and the creditworthiness of bonds has not changed.

As I think you are hinting at, the US is in the process of cancelling many contracts deemed no longer in the interest of the country under a new administration. Contracts can represent a form of obligation similar to debt and there are many companies who will not sign contracts with the government due to the complications involved (or who will request very favorable terms). Unfortunately, there is not really a good rating mechanism (at least that I am aware of) for rating entities that is risky to enter into a contractional relationship with - this stuff is often passed around via word of mouth.

[alaxhn]

All debt is functionally similar in that it represents an obligation from the borrower to the creditor generally with interest which must be paid off in full or consequences will follow. Analogies can recognize similarities in a situation which can help to illustrate a point even when situations are not identical. But sure, no one is coming to confiscate air force one if the US doesn't pay off it's debt :D.