[pydry]

Total debt / GDP is the wrong metric for that. There's no limit to the serviceability of debt in a currency you print.

It makes more sense to conceptualise it as the total size of a giant savings account run by the government.

We are walking further out on the ice but that is measured more in other ways - with harder metrics like inflation, access to cheap energy, resources, industrial density and capabilities and access to technology - not this headline number.

[somenameforme]

Even if we just ignore inflation and other issues, there's still a hard limit because governments don't literally just print money, but sells bonds at market rates. As confidence in the economic stability declines the interest rates the government is required to offer on those bonds trends upward. So right now even 10 year treasuries are selling with just under 5% interest. As a result we're now paying $1.4 trillion per year in interest alone, and that number is going up far faster than the economy is growing. This [1] graph looks quite disconcerting. And it's a vicious cycle. The less confidence there is in the stability of this game, the more the government will have to pay to sell that debt. And the more they have to pay, the more debt they end up needing.

[1] - https://fred.stlouisfed.org/series/A180RC1A027NBEA

[pydry]

>governments don't literally just print money, but sells bonds at market rates

no, sometimes they literally do exactly that.

google for quantitative easing. that's what it is and it's a tool that can always be used by monetarily sovereign countries to bring bond interest rates down by as much as they want.

insolvency thus isnt possible.

[somenameforme]

The reason Federal Reserve banks are independent in most/all countries is precisely to avoid this sort of scenario where the government just relies on their ability to print money to finance infinite deficit spending. Governments want to do this because it's politically beneficial in the short-run (e.g. before an election) but it's catastrophic in the longer term due to inflation, economic instability, and other consequent issues. And QE drives up inflation in a scenario where the US is already having relatively high rates and high inflation. QE in this scenario would be like throwing fuel on a fire.

Maybe you can argue that if the alternative was complete insolvency then the Fed would feel obligated to comply, but you find yourself in a scenario where you're choosing between immediate economic collapse and rapid economic collapse.

[hvb2]

> insolvency thus isnt possible.

You might want to look up Zimbabwe or Germany (after WW1). When your money becomes worth less than the paper it's printed on...

So, it's possible, and has happened before.

[raincom]

As long exporter nations want to swap their real assets with digits (US dollars), US is solvent.

[hvb2]

Yes, and that's a function of knowing what you can buy for that dollar.

As soon as you start devaluing your currency to get out of debt, not so much. I believe Argentina is a fine example of that

[pydry]

neither of those countries owed money in their own currency.

when I said "monetarily sovereign" I think you probably didnt understand what that meant.

[hvb2]

That is a valid point, however if you look at Germany you will see that as soon as your money is worthless people will want payment in something else.

If a country ever decides to use your 'monetary sovereignty' they might as well just stop playing their debts as any holder of the debt will see that as the same thing. They're not getting their money back, or when they do they get it in a currency now worth a lot less. At this point you can say you're still solvent in the same way as you can say you did repay all your debts.

See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...

[pydry]

Search for the phrase "gold marks" in your link. This is the key. Gold denominated debts != paper denominated debts and Weimar debts were always gold denominated.

It might seem like a minor distinction but it's actually very important. Gold can't be printed, whereas currency can be, so insolvency when your debts are denominated in gold is very possible.

Argentina is also another example of a country that suffered hyperinflation because it had debts denominated in something it could not print (dollars).

Whereas Japan had even higher debt / GDP than Argentina and got deflation instead.