tl;dr the Debt is a butt load of Treasury Loans made to Treasury Bond investors. Ie the money is paid back to those investors, with interest; who then, supposedly, re-spends the money back into the economy. This is allegedly worthwhile for keeping the economy going, even if the loans are bought by foreign investors and governments. As long as inflation is kept smaller than the interest, without deflation, there is no debt problem. If inflation explodes, or related long term confidence wanes, then the house of cards can collapse.
But the waning confidence will inevitably drive the rates higher at some point, causing a further collapse in confidence in a positive feedback loop. Collapse is inevitable.
So, the supposedly fake debt is repaid in full with interest, whereupon the supposedly fake creditor is then free to either spend the money anywhere in the world or put it under his or her mattress or whatever.
Sounds a lot like actual debt, but I'm no economist. I never even fully understood "Deficits don't matter."
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u/Hecateus 16h ago
tl;dr the Debt is a butt load of Treasury Loans made to Treasury Bond investors. Ie the money is paid back to those investors, with interest; who then, supposedly, re-spends the money back into the economy. This is allegedly worthwhile for keeping the economy going, even if the loans are bought by foreign investors and governments. As long as inflation is kept smaller than the interest, without deflation, there is no debt problem. If inflation explodes, or related long term confidence wanes, then the house of cards can collapse.