How is the U.S. going to pay its huge debt?
The title Is a question asked by Vlady Kovbas (a community manager at the Treehouse Society) which appeared in the Quora knowledge platform during 2018. Here is my responding answer:
From John Hermann:
The US does not have a national debt problem. Actually, US Treasury bonds and other securities are not really a form of debt at all. It is more appropriate to think of these financial instruments as a form of “broad” state fiat money. Because the federal government is a monetary sovereign, which means that it has a unique and unlimited ability to create currency for the domestic sector. So it never has any difficulty in servicing such “debt”, and can effectively roll over the aggregate “debt” in perpetuity (which it does).
Moreover, the net financial assets that the federal government creates (i.e. when it deficit spends) are absolutely required if the domestic sector is going to have the means to adequately save, spend and invest, and if the economy as a whole is going to prosper.