Educate me
Uh oh.
The drag of an interest payment, our reserve currency status, deficit and debt being run at times of economic hardship... I'm aware of all of the pieces, but don't know if there is a general consensus on why or why not worry about this, or at which point a high debt harms us.
I've read many inputs over the years but they seem mostly political and not necessarily economist and I don't have the background to have an understanding if there's a general consensus.
The main thing to understand is the actual function of debt, especially national debt and especially in the case of the US. I think I've recommended it before, but a good primer on this is
The Deficit Myth by Stephanie Kelton. While MMTers sometimes understate the downstream impact of a nation racking up debts and wave away the political difficulty of tax policy as a check on inflation, their theory of money is pretty on target at least so long as the current structure of global political economy remains intact.
At this point in global capitalism, debt is a leveraging instrument between nations and between nations and the private sector. The US central bank can basically do what it wants since the era of free floating currencies, as can some other regions/nations central banks that enjoy reserve or semi-reserve status. The national debt serves as an instrument to control the money supply, interest rates and regulate international trade, all of which are crucial when your currency is in such wide circulation. The problem of course is that this system largely relies on the rest of the world going along with it and on relative political and productive stability of the nation. So if the US began to seriously politically disintegrate or if the rest of the world just said F it, we're off those greenbacks, then the debt would become a very real and serious problem. While there are signs of both, neither are in their advanced stage at this point. It would require a lot of serious reorganization of the global economic system including the destruction of the IMF and World Bank for nations to unwind their positions so to speak from US reserve status. Because the US manages its global circulation of currency through bond issuance and other instruments, the sticker shock national debt signals the global dependency on the US rather than the other way around. In many ways, this dependence is more dangerous to most of the world than even the US nuclear arsenal and military might because being cut out of it has disastrous consequences. See Venezuela for an example. Lebanon is another example where the central bank is so desperate to hold onto dollars that it's willing to tank the rest of its economy and let the people literally starve and die rather than move it.
So in short, US debt is nothing like household debt and also not like other national debt. This system is not sustainable in my view and will eventually be replaced, but probably not until we're old and gray and full of sleep.
Another good book reco I can give is
Debt: The First 5000 Years by David Graeber. Thinking about it, I wonder if this is what Squid Game was really about.
