If it remains long-term unpaid debt, perhaps. But in the meantime the country is still paying
interest on that debt, and the bigger the debt the greater the interest. Absentglare's source suggests that for some unstated reason creditors are currently willing to accept a net loss on loans to the US government - interest rates on one to five year bonds being lower than inflation. That frankly sounds more than a little dubious to me, and since interest rates on ten or twenty year bonds are higher than inflation (assuming I've understood what I'm seeing correctly) my gut feeling would be that US debts incurred/renewed in the past couple of years must have mostly been at those rates. But even if I'm way off base, odds are the lower-than-inflation rates at present will not continue: And based on some very rough estimates in post #23 of interest rates averaging 2-3% higher than inflation in 1990-2007, the net cost of current US debt interest payments (excluding intra-governmental debt) might plausibly be estimated at $260-420 billion dollars per year in the next decade.
How can that not be considered a bad thing? It may be a necessary expense, in circumstances such as following the recession, but surely in the long term reducing the burden of interest payments is a good reason to aim for lower debt in itself?
But the bit you quoted was about the hypothetical scenario in which the debt must be paid: Perhaps the interest rates expected by creditors are too high, or whatever. The total value of US dollars in regular circulation seems to be
somewhere in the order of $10 trillion. More than half of the >$13 trillion of public US government debt is
owed to domestic investors. So if over a relatively short period of time most of that debt was called in or unable to be re-borrowed, and assuming that it was not covered by tax hikes and spending cuts but instead by simply printing more money, wouldn't having 50+% more US dollars in circulation be followed by 50+% inflation in short order?
So a large debt seems to mean either:
> An annual burden of interest payments, transferring public wealth into the private/foreign sectors, if it's not paid off
> Big tax hikes/spending cuts for the country in whatever unfortunate decade it
has to be paid
> Excessive inflation for the country in whatever unfortunate decade it has to be paid
The first may well be the most benign option, but I still can't see how it can be considered a
good thing - it'd be a necessary expense at best. But like I say, I'm all but economically illiterate, so perhaps I've missed something here.
