- Default: Yes it can happen, but it's voluntary and done politically. It's not a technical requirement. The US government can always service the debt. Here's a

- Default: Yes it can happen, but it's voluntary and done politically. It's not a technical requirement. The US government can always service the debt. Here's an article from the Economist, "Countries rarely default on their debt" https://www.economist.com/news/finance-and-economics/21732808-venezuela-exception-rule-countries-rarely-default-their-debts https://www.economist.com/news/finance-and-economics/2173280... - Interest rates: the Fed controls overnight interest rates, afaik. But what happens with long-term rates is that the Fed uses those bonds as a "reserve drain". https://www.nakedcapitalism.com/2010/08/why-treasury-bonds-do-not-fund-our-federal-deficit.html https://www.nakedcapitalism.com/2010/08/why-treasury-bonds-d... Long term interest rates have been going down for decades, despite the size of the debt consistently going up. - China: the point is that they already have over $1 trillion in Treasuries, what is the difference between holding Treasuries vs holding cash? It's just two different kinds of bank account at the Federal Reserve. And the former pays interest, so why convert to the latter? They would only do so to spend it. Which either means a trade surplus for the USA (a boon for the economy) or converting their holdings into another currency, which just means transferring ownership of the Treasuries to someone else. In both cases, inflation and foreign exchange rate are the biggest risk. Do you think there is interest rate risk here? As for the Fed, I don't see limits to their powers. - Inflation: I see the causality in reverse. Increased government debt leads to inflation (because government debt is money, money supply has gone up, and aggregate demand through government spending has gone up) rather than the government trying to inflate to pay off the debt. Stagflation in the 70s was caused by a supply shock (oil prices). If inflation happens because of the money supply, then the government can fix that problem by shrinking the money supply. If it happens for other reasons, then the government needs to address those issues. What is the problem with the debt then? How is that a concern?