Greece "looks bad" because they cannot print the currency that they owe debt in. We don't have that problem. Greece is just like a US State or local government for all practical purposes — they are a currency user and can run out of money. Whereas our Federal Government is a currency issuer that creates its currency by issuing more debt. The Federal government can never run out of money. Our money supply is "debt-based" which means that in order to create money, we must issue more debt. It's just how the currency is created.Benko wrote:How about when other countries lose all faith in the US and what we are doing?melveyr wrote: I am simply arguing that the US government can spend more than it taxes indefinitely. The constraint is inflation.
We are lucky that Greece, etc are in line in front of us to make us look...less bad, but the point still stands. I do understand the fiat money issue (at least someone).
If other countries lost faith in the United States, they might demand payment in something other than dollars. In that case, we would probably owe foreign-denominated debt (i.e. we'd owe debt in a currency that we cannot issue). That would be very bad because when that happens the rules of fiat money stop working. It's a very bad situation.
But countries don't just "lose all faith" just because our spending seems high and our deficit is 200% of GDP or 300% of GDP. Debt to GDP is pretty meaningless since Debt is a unit of currency and GDP is a unit based on the time it takes the Earth to revolve around the Sun.
Countries might lose faith because the currency lost too much purchasing power, or if our government lost control of power (such as in a war or regime change). And then other countries might require us to carry foreign-denominated debt (which would be bad). But, that's not what's happening right now. And our military might makes it difficult for countries to refuse our dollars (i.e. please kindly accept our dollars if you want us to keep maintaining regional stability in your part of the world).
To suggest that countries would refuse dollars just because the amount of spending seems high to you is not a realistic reason for countries to refuse dollars. Something else would need to happen (such as a large loss of purchasing power) in order for countries to refuse dollars.