Will U.S. debt cause a global collapse?
When you should worry, and when you shouldn't.
The other day, noted entrepreneur, internet personality, and occasional international fugitive Kim Dotcom posted a Twitter thread proclaiming that the U.S. (and perhaps the world) is about to collapse due to excessive debt:
Now, normally I would ignore this as just one more over-the-top clickbait doomer rant. I see lots of goldbugs, Bitcoin maximalists, and general unassorted end-of-the-world types saying this kind of stuff.
But I see this idea — that U.S. debt means the country is somehow bankrupt — so often that I thought I should write about it. There are probably a lot of people out there who read this stuff and start to uneasily worry that it might be right — that the establishment and economists might be lying to them, that the whole U.S. economic system is a house of cards, and that catastrophe is on the way. Those worries are unfounded — the U.S. economy is not a house of cards. But instead of simply reiterating that and dismissing rants like Dotcom’s, I find it helpful to explain where they go wrong.
And also, where they go right. Because although the kind of debt-driven hyperinflation crisis that Dotcom envisions is not likely, it is technically possible (or something like it, at any rate). So it’s important for people to know when U.S. debt is and isn’t a risk to the nation’s stability, and why.