[rich_sasha]

The practical framing would be as two follow-up questions: what do the lenders care about? And what happens empirically when debt spirals?

If lenders do nothing, then nothing really matters - keep borrowing and let your debt grow exponentially.

In practice though, lenders, in their wisdom or folly, get spooked when debt goes up. In the Greek debt crisis, it all started with debt in the region of 130% of GDP. Rolling the debt with more debt spiralled away as lenders wanted an ever higher interest.

So US would either need to start really inflating its debt and test the investors patience, print the cash and let inflation run away, or tax and cut spending.

In the first scenario it kind of doesn't matter where the limit is - people sometimes argue about magic levels. The issue is that eventually the debt grows exponentially, so once it's out of control, it will exceed any reasonable level pretty quickly.

Can the US convince the world that their debt is special? I'm not sure. My reading is that investors are already twitchy about US debt, for other reasons for now, but higher debt levels surely won't calm them down.

So really I think the US has no better choice than to keep its debt down.

[throw0101a]

> If lenders do nothing, then nothing really matters - keep borrowing and let your debt grow exponentially.

Lenders are currently doing nothing: that does not necessarily mean they will do nothing forever.

Because should the lender actually do something eventually, the lendee may be in a world of hurt. The borrower probably does not get to the point when lenders start doing something.

[ndsipa_pomu]

100% of GDP is a level of debt that seems unlikely to be paid back, so presumably most lenders aren't considering whether they'll eventually get their money back, but instead are focussed on getting their interest payments. I suppose the crunch is when alternatives become a better mix of risk/return.

[Ekaros]

I don't think paying whole thing back has been on table for decent while. The question really comes down to is the return from interest sufficient compared to other options, will the price of underlying asset keeps it value at par. Meaning can you offload it before maturation and not lose. And finally will at maturation refinance be possible.

With money printing or some FED operations I doubt there will be default on principals. It might happen if sufficient political pressure is in place though unlikely. So in the end risk is spiking rates and inflation being foreseen. No point investing on losing bet.

[ndsipa_pomu]

Yeah, there's a constant stream of new investments and paying back of some debts, so as long as some investors are interested, the full repayment never needs to happen.

Of course, as the risk increases, investors will want higher returns to consider it a good bet as otherwise the debt repayments will start to overshadow the new investments.

[bombcar]

Everything I've ever seen shows that problems in these areas happen very slowly, and then all at once.

Previous similar (but totally different) situations ended in wars.