US Debt and the Magic Yard Sale

The US has a large federal debt. Many talking heads would have you believe that this is an existential threat to the republic. But before you go out with your hair on fire and start hoarding canned food and ammunition, here are a few things to consider. A little less than half of the federal debt is owed to one federal agency by another. Almost all the rest is owed to US institutions and individuals. And don't forget essentially all that debt is owed in dollars. So any of the debt that is owned by foriegners represents a promise that the proceeds of that debt will be spent inside the US at some future date. If your personal debt worked that way, about half your payments would be made from one of your bank accounts to another of your bank accounts. You would owe your wife most of the rest of it and any money that you owed to someone else could only be spent at one of your family yard sales. Oh and don't forget you would have a big printer in the basement that could wipe it all away in an afternoon. (Not to say money printing would be a good idea for any macroeconomy under inflationionary pressure, but just saying.) Federal debt is a horse of a very different color than personal debt.