> The best thing about it is that the Fed holds most of that debt so they kind of monetized it with no major repercussions.

You mean beside a lost 30 years, one of the lowest rates of family formation, and a high rate of suicide among young people?

Sure.

Here is a broad overview of some current Modern Monetary Theory thinking. It's a good read, dispels a lot of fearmongering while also exposing where the real problems lie.

https://fictitiouscapital.substack.com/p/money-myths-and-deb...

https://fictitiouscapital.substack.com/p/5

https://fictitiouscapital.substack.com/p/8-the-global-reserv...

I'd like to venture a counter-point. High debt loads are manageable - if interest rates are low. This begs the question of what meaning a low interest rate has. In practice, at an individual level, interest rates are a combination of three factors.

1 - The Risk rate. (How do avoid you simply defaulting on me)

2 - The opportunity cost. (How much more is Person A willing to pay me than Person B)

3 - The time value. (How much do I need to make on this loan to make it worth the payoff time).

While you can argue that an efficient financial system with robust liquidity should drive 1 & 3 to 0. It does not make sense for 2 to be non-zero. When the opportunity cost is zero, it directly implies that capital holders have vastly more dollars than there are viable loans, or that the cost of changing a human beings task from their current task to a different task has gone to zero.

Neither of these statements should be true, capital should be distributed such that capital holders do not have more money than they can lend - and there should always be a non-zero opportunity cost from picking up someone from their current task. The latter point directly ties to the potential for wage growth in the economy.

> Modern Monetary Theory

Modern Monetary Theory basically enshrines the fact that scamming the general public of its wealth is a perfectly fine practice, especially when they don't notice it's happening, boiling frog style.

It also only works if - like in the case of Japan - the debt is held internally to a country, a captive audience if you will, which has no choice but to be ridden roughshod by its rulers.

Is the US sovereign debt held internally? I don't know, but my bet would be that a large chunk isn't.

Although that may no matter as long as they are the planet's hegemon, which sort of makes any debt holder internal.

But that latter status quo may not last very much longer.

Just because they don't care now doesn't mean they won't in the future and like you said it is a potential disaster if they do. Because it will come at the worst time because that is when these things happen. I think a reasonable amount of debt is healthy and fine, but people want to spend and think that the bill doesn't ever come due. Sometimes inflation eats it and it was good that you spent the money, sometimes your face will get ripped off and you need to be careful.

I'm dubious about MMT, and unfortunately it seems like only a string of disasters would conclusively disprove it.

Sovereign debt is fundamentally different to any other kind of liability. So yes, I believe that your comment "it doesn't seem like the markets will ever care" should remain true so long as the real economic activity of the USA is paramount to global functioning.

1. Will there ever come a point where the debts can't reasonably be repaid?

2. Will the people who are owed the money have the political power/influence to be able to force the issue?

3. The issue forced, will there be any feasible mechanism of paying it back other than raising taxes rapidly and horrifically?

4. Given that this is a public (United States) that is massively in debt (to the tune of nearly twice our annual GDP), will they be able to absorb that hit on top of everything else?

I'm not sure I subscribe to the school of economics that says money is magical and debt never has to be paid back, but if I'm wrong in that, I'd love to here what part of this I misunderstand.

Markets don't have a choice. US dollar dominance is backstopped by US military dominance.