If a household can keep on borrowing money basically indefinitely to pay for expenditures that exceed revenue, that's basically what the US's (and many others' like Japan's) national budget is.
To put it another way: America can afford to spend more than its revenue because people (Americans and otherwise, see the bond market) and countries (see prior) are (still) willing to lend more and more money. So what happens when that gravy train finally stops?
Note that it is easy to default on our debts, most prominently by just not passing a budget to pay our debts. How we are going to pay all this debt off is a very real question that needs an answer eventually. Brushing it off as "we aren't a household budget" is peak denialism.
> If a household can keep on borrowing money basically indefinitely to pay for expenditures that exceed revenue
If a household had an undefined credit limit and could take out debt to pay for any other debt, arbitrarily, and indefinitely, they'd be dumb to ever work a day in their life. But consumer creditors understand that their customers have essentially zero global power and will die someday, so the world of consumer debt doesn't work that way.
> So what happens when that gravy train finally stops?
You tell me, when is everyone in the world going to stop buying treasuries? I don't think there is a date. As long as the US has a stable and powerful economy, people with money will want somewhere to put it.
> How we are going to pay all this debt off is a very real question that needs an answer eventually.
The literal answer is that it all gets paid off all the time, according to the payment schedule of each individual security, but we continually reissue debt because there is literally zero reason not to.
> so the world of consumer debt doesn't work that way.
Yes, but I laid out how national budgets and household budgets are fundamentally the same thing: The flow of cash coming in must meet or exceed the flow of cashing going out. I'm surprised this detail is completely lost on you.
>I don't think there is a date. As long as the US has a stable and powerful economy, people with money will want somewhere to put it.
That's the thing, isn't it? It's not an absolute guarantee that the US will continue to have a stable and powerful economy ("past performance is not a guarantee of future results", as any good investor will tell you). Lest we forget, US credit ratings were lowered following one of the many recent shutdowns we had, and the world at-large is slowly but certainly shifting from Pax Americana to Pax Sino.
So again, what happens when the gravy train stops? We don't know when that is, we don't know if the train will stop in the first place, but we have to have a plan in hand because debts must be paid.
>The literal answer is that it all gets paid off all the time, according to the payment schedule of each individual security, but we continually reissue debt because there is literally zero reason not to.
Yes, the issue is where do we draw the line between reasonable amounts of debt incurred and unreasonable? Spending more money than we make is fiscal irresponsibility, borrowing money to make up for the shortfall is merely a workaround and borrowing money to pay back borrowed money is disturbing.
Where do we consider we are borrowing too much? This line can and should be constantly reevaluated as necessary and appropriate, but first of all do we even have such a line? I don't think we do, which is why the national deficit is such a hot topic.
> I laid out how national budgets and household budgets are fundamentally the same thing: The flow of cash coming in must meet or exceed the flow of cashing going out. I'm surprised this detail is completely lost on you.
That's absolutely not true. Governments can manipulate the supply of money they have available to themselves in numerous ways. The most obvious counter-example is that governments can simply print physical cash. It is rarely a good idea, but it absolutely a thing that can and has been done.
> the world at-large is slowly but certainly shifting from Pax Americana to Pax Sino.
> So again, what happens when the gravy train stops? We don't know when that is, we don't know if the train will stop in the first place, but we have to have a plan in hand because debts must be paid.
If it goes at the pace it has been going, it'll be a continuous squeeze instead of "stopping". What would happen in that squeeze? Interest rates and taxes will slowly go up and the economy will stagnate.
> Where do we consider we are borrowing too much? This line can and should be constantly reevaluated as necessary and appropriate, but first of all do we even have such a line?
Not really, because lender confidence is more complicated than a number as simple as debt-to-GDP, but it's a good benchmark value. I think the obvious answer is that lenders will indicate with their buying habits when they disapprove of the debt, and that's really the indicator that ultimately matters. But it's a complicated question that economists don't even agree on.
That's still addressing the question of cash flow: Making the cash coming in meet or exceed the cash going out by printing more cash to go out.
The various means to effect cash flow might be different, but national and household budgets are fundamentally the same.
>What would happen in that squeeze? Interest rates and taxes will slowly go up and the economy will stagnate.
Yes, are we prepared? I don't think so. Also, we can probably do something about that to reverse course or at the very least dampen the grief. Are we doing something, though? Again, I don't think so.
>I think the obvious answer is that lenders will indicate with their buying habits when they disapprove of the debt,
In the interests of pre-emptive preventative measures, because those are always cheaper and easier than cleaning the room after the shit has hit the fan, are we doing something better than doing nothing?
To put it another way: America can afford to spend more than its revenue because people (Americans and otherwise, see the bond market) and countries (see prior) are (still) willing to lend more and more money. So what happens when that gravy train finally stops?
Note that it is easy to default on our debts, most prominently by just not passing a budget to pay our debts. How we are going to pay all this debt off is a very real question that needs an answer eventually. Brushing it off as "we aren't a household budget" is peak denialism.