All the great Western hegemonic powers have used public debt to finance the requirements and ambitions of the state. This was true of Spain in the sixteenth century, Holland in the seventeenth century, England at the height of its power during the eighteenth and nineteenth centuries, and the USA since World War II [1]. Public debt finance is a force multiplier that enables the government to undertake far greater civilian and military projects than it could otherwise achieve. Everyone knows this, including the people who are running the U.S. Treasury and the Federal Reserve.

As a percentage of GDP, government debt is high by historical standards, and it is rising at a fairly rapid pace. That could be a problem if it continues unabated. But there are two solutions: reduce spending and/or raise taxes. Most U.S. federal expenditure goes toward either defense, entitlements or interest on the debt, so it seems unlikely that spending will fall very much. That means higher taxes. At some point, the country will need to find a political reformer who can sell tax increases to the electorate. Until then, the crisis just continues to quietly grow.

[1] Giovanni Arrighi (1994) The Long Twentieth Century: Money, Power and the Origins of Our Times

https://www.amazon.com/Long-Twentieth-Century-Money-Origins/...

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negura 5 hours ago | parent [-]

> But there are two solutions: reduce spending and/or raise taxes.

there are other solutions, that are more convenient politically than austerity:

- productivity boost

- higher nominal growth through inflation

- financial repression

and in theory there is also the option of defaulting

	▲	Rury 4 hours ago \| parent [-]
		"Austerity" is a red herring. I mean let's be serious, every option is austerity for someone... Cutting spending, means those who would have received that debt spending take a loss (perhaps their job). Raising taxes means taxpayers pay. Raising productivity or inflating the debt means the young and laborers shoulder most of the burden. Financial repression means capital owners pay. Defaulting means bond holders pay. This is what people who argue the debt doesn't matter don't understand. Sure it doesn't matter in the sense that we could always just roll the debt forward, and continue to make future generations pay. Just as it's possible to choose over and over again to wine and dine at someone else's expense, against their will. No the debt always matters, because, it's a matter over who gets to benefit and who has to pay.