[cowanon77]

This is the big misnomer - it's debt on the U.S. balance sheet, but is a credit on someone else's balance sheet. By itself, it's not necessarily bad; it really depends on who the debt is issued to, why, and on what terms.

Time would be better spent talking about other issues, but national debt is a simple number politicians can complain about rather than talking about the more complex issues that really impact the rest of us.

[ptak]

Can you elaborate? National debt seems like one of the few relatively straightforward metrics one could use to understand the state's fiscal responsibility (or irresponsibility).

[cowanon77]

It's similar to the problems with GDP, CPI, U-3 (Unemployment rate), etc. You really need at least 30-100 metrics or more to get a grasp of what's really happening in a complex eonomy. Debt can be good if it causes more growth in the economy, and bad if just gets trapped in a few foreign investment funds. But the number by itself doesn't tell us any of that, yet that is all that grabs the focus.

Often politicians will try to shrink or control the debt without deeply investiagting the true causes, because the real causes may be politically inconvenient.

[ptak]

That sounds a little like saying, "Don't check my bank account balance, because I've got lots of things in motion and some of them are going to pay out big." Might be true but the balance still says a lot about your general posture, how aggressive/risky you are, how defensive.

[OkayPhysicist]

National debt tends to confuse people, because they imagine the government like a household, or maybe a small business: You have some income (taxes), which you use to spend on things (government services, military, social security, etc). If you run out of money, you have to borrow it. If you borrow too much, people stop lending you money, you're up shit creek and have to cut spending.

That's not really the case with a nation-state with sovereign control over their own monetary policy. In that case, currency works a lot more like an MMO currency like RuneScape gold. The government gets to set up sources (government spending, killing goblins), and sinks (taxes, buying stuff from in-game shops), with the risk of screwing up the balance being a shift in perception of value of the currency. Just like how I never need to worry that RuneScape will run out of gold, and the next goblin I kill won't drop any, the government can't run out of money. It can always print more. Taxes are used to induce a demand for the currency (since you need to pay your taxes in USD), creating a flow of money through the economy. Tax too much, or print too little, and you make people expect the money to gain value, and shrink the value proposition of investment compared to hoarding money. Print too much, or tax too little and you end up with money piling up in some subset of your participant's balance sheets, shifting people's expectation to the money being worth less in the future, leading to a devaluation of said currency (since the people with a bunch of money are willing to spend more of it for the same good).

The key is that whole "expectation of future value" element, which differentiates government debt from private debt. It's a much looser coupling than "I have 45 cents in my bank account, I can't buy groceries this month". A currency can be useful, valuable, and perfectly suitable even if it loses a couple percent of its value every year, forever. That would reflect as a forever increasing national debt, but it's fine, because national debt doesn't matter.

Unexpected changes to the rate of change of the national debt is the thing that matters, and even then only indirectly, by way of the public perception of the value of the currency, which leads to the inflation/deflation rate.

[ptak]

That all tracks, and it's a helpful framing. I think the alarmism here is more about the rate of increase rather than the absolute value.

[OkayPhysicist]

Not even someone else's! A significant amount of the national debt is owed to themselves.

At the end of the day, in the world of fiat currency, taxes and spending are not intrinsically linked. They're mediated by public perception of the value of the currency, which can be sensitive to unexpected speed ups of the money printers, but is frankly unaffected by the normal rate.