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Originally Posted by octothorp
So what's the deal with the US and their trillions of dollars of debt... Is this something that is likely to come back and bite them at some point, or can they simply continue to spend without regard for this figure? I think I read something about China trying to buy up US debts from other countries in order to attempt to become a greater US creditor, but I don't really understand the logistics in doing so.
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The US strategy is that "debt is a good thing" and that whenever they run out of money every year, they just buy more debt. They can foreseeably keep this up in a healthy economy by growing their GDP and thus, virtually making debt smaller by making it a smaller portion of GDP.
The way this works is that if you can stimulate growth and investment though debt-financing, just keep borrowing if you can manage to grow faster so that what you borrow becomes less signifigant. Of course, the US debt is like 67% of GDP but that tell that to Japan who's debt is like 175% of GDP.
The problem though is that if the U.S. economy finally tanks and does it hard, they are totally screwed.