Not an economist, but theoretically tax income and bond sales (and those are not exactly selling right now) go into a big pot of money that funds the budget. The debt payments being one part of the budget

In practice, money appears in bank accounts linked to budget provisions for various agencies and purposes. The unexpectedly high costs and debt payments (from the Iranian war largely) just drain the relevant accounts faster, meaning they'll run out at some point later in the year if they don't get more funding... Theoretically the government agencies wouldn't overextend themselves like that, but we live in interesting times

But the United States pays it's debts

Fourteenth Amendment, Section 4: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

What if it can't, or doesn't? No one knows, it's uncharted territory in the current era for the US, which is currently the backbone of global trade

There are special types of debt of a county can sell:

The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In a given fiscal year (FY), when spending (ex. money for roadways) exceeds revenue (ex. money from federal income tax), a budget deficit results. To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury bonds, bills, notes, floating rate notes, and Treasury inflation-protected securities (TIPS). The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which is common, the national debt grows.

So what if no one is buying these offered bonds and notes? They sell them for cheaper. If they can't sell enough to cover the debt payments even then? Uncharted territory

It's definitely different from household debt, since a government can choose to print money or just not pay (although that's currently considered unconstitutional)

If the US government decided to print the money to pay the debts, their rock solid reputation for paying out on bonds will be damaged and inflation might skyrocket. If they fail to pay on time, the reputation will be destroyed

And that comes down to the investor response. If investors decide to keep buying, everything continues as normal. If they stop buying, the government could decide to print money (which will probably destroy the USD as a currency for global trade)

TLDR: the debt is very different, since the government sets the terms of the repayment and the money supply. They hold all the power, but their reputation is what allows them to raise more money going forward, so reneging on a country's debt is not done lightly

In the case of the US, anyone who tells you what happens if the debts aren't honored is completely speculating. No one knows what that means for the global economy

Dear Little Timmy,

The best I can do is make a paedophile president.

Fuck you,

God.

AI bubble bursting will cause a great tech depression. At that point its weapons free for the creditors.

It does actually matter. While the US isn’t going to go bankrupt as a result of printing money, there is a real consequence within the framework of the way the system actually works. They can issue infinite currency, but the two problems they have are inflation and debt payments. Inflation devalues the currency, while higher debt payments mean that there’s less operational budget available. So, end result ends up being less money available for productive purposes as more and more of the budget ends up being allocated towards interest.

The government doesn’t just print cash and hand it out either. What actually happens is that they issue Treasury bonds instead with the understanding that private interests buy them and the government will pay back later with interest. These bonds are then bought up by pension funds, foreign governments, big financial institutions, etc.

When the government prints too much money or issues too many bonds, the bond holders start getting awful nervous about their investment because they wonder if the dollars they get back in ten years will be worth the paper they’re printed on. So they demand a higher yield to cover the risk. It’s not unlike a credit card company jacking up your rate when you miss a payment.

Rising bond yields, in turn, make the government’s interest payments go up. Bigger and bigger checks need to be paid to the people who lent the money, which further reduces the operational budget. Today, that sum is already sitting at over a trillion dollars a year. It’s money that’s just flowing out of the treasury and straight into the accounts of bondholders.

And of course, as you note, the other problem will be that the rest of the world will start dumping dollar because holding US bonds will mean losing money as the dollar continues to depreciate in value.

not the entire world's, just the Western financial system

This phenomena ruined so many African nations. A dictator comes in, defleeces the economy and disappears. Leaving the country open to leveraged loans, and world banks.

That is a very different phenomenon. Those countries owed money in a foreign currency, namely US dollars. The US also owes in US dollars, but that is its own domestic currency, which it can print at will.

The US has no need to take on these USD loans, because it is the issuer of that very currency.

So why is the US borrowing its own currency? To give the wealthy a safe place to park their capital with interest. Why would the US do that? Because the wealthy want it to do that, and they run the state.

lets just say, borrowing is favourable for the usa. If they decide to just not pay, noone is gonna get the money back. Of course, then you have no one willing to borrow you money, then you can still start printing.

Say the us owes 1 Trillion us dollars. They print so much money inflation made that 1 Trillion equal to the value of one Apple. Boom, you can pay all your state debt with 1 apple. For convienence you introduce Trump Dollars afterwards with exchange rate 1:1Trillion.

I think non banana republic consensus is, states shouldnt borrow money to cover running costs but to cover investments. investments provide a ROI you can pay the debt back with.