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It’s funny looking back at how many times people have panicked about the national debt. We freaked out at 1 trillion, then 5, then 10, 20, 30… every single milestone was supposed to be “the breaking point.” And nothing happened. Markets kept going, the dollar very volatile but always ended up OK even strong at points, the world keeps buying Treasuries. Even though headlines always said they will dump
The big thing most people miss is that government debt doesn’t work like personal debt. Countries don’t pay it off like a credit card. They roll it over forever. What matters isn’t the number, it’s whether the world trusts your currency and wants your bonds. For the U.S., that answer is yes, and has been for decades.
Treasuries are basically the plumbing of the entire global financial system. Banks, funds, foreign governments, the repo market, insurance companies, they all need Treasuries as collateral. If the U.S. ever stopped issuing debt, the global economy would actually fall apart. People don’t realize how central it is.
And the U.S. issues debt in dollars. That alone changes the entire conversation. A country can’t “go bankrupt” on debt it owes in its own currency. The real constraint isn’t the debt number, it’s inflation and interest costs. As long as those are manageable, the size of the debt doesn’t mean much. Just a Number!
Plus, every major country is in the same boat or worse. Japan is over 250 percent debt to GDP. Italy is around 140 percent. China has a massive pile of hidden local and off book debt. Nobody collapses because the modern financial world literally runs on this system.
At the end of the day, the U.S. still has the reserve currency, the biggest capital markets, the most trusted debt, and the tech and military power that props the whole thing up. The debt number could be 60 trillion and people would still be buying Treasuries.
So yeah, after freaking out at every milestone for 40 years, it’s pretty clear the number is mostly just a number. The structure underneath is what actually matters.
Please explain what if I missed anything ??