Japan’s is one of the highest on Earth – it is ~216% of GDP. Has their bond rating been creamed yet, and have they been afflicted with mass capital flight? Are investors unwilling to invest in Japan and therefore not doing so?
Mass capital flight can occur when you have external investors (unlike the US) Japan has almost none. (And as with the US their debt is payable in their own currency…)
There are three very big differences between Japan and the US in regards to debt…around 50% percentage of US debt is held externally (mostly by foreign central banks so that the currencies of respective nations do not rise appreciably against the US dollar, it’s good to be the king until you are overthrown…) whereas almost all of Japan’s debt is held internally, the US has a substantial trade deficit whereas the Japan has run trade surpluses for years (even if the Japanese Yen were to go kaput Japan makes more products that the world wants than it buys), and the US is a net debtor nation whereas Japan is a net creditor nation.
The US has incentive to eventually renege on it’s debt either by outright default or by de facto default by printing money.
US debt held by foreigners
Total US debt
Note usually when we speak of US debt we speak of Debt Held by the Public as opposed to total US Public Debt which includes intergovernmental holdings. If we were to compare total US debt to GDP, then the US would hit more than 100% debt to GDP ratio by next year.
There’s another option to massive deficit spending…raise taxes on fuel (70% is imported…) on consumer items (a huge chunk of which is imported – exclude food, drugs, and clothing…) and on the wealthy (above 150k for individuals…) and reduce our overseas military exposure. These steps would align the US more closely to the EU tax structure. I place the possibilities of the aforementioned in the near future (2 to 5 years…) as somewhere between Bob Hope and no hope but believe eventually all of the above will be adopted.
Uncle Milton, a deficit hawk, repeats common falsehoods about the US debt. First of all, Japan had little to external investment before it ran up all that debt, and it has none now. So there was no loss of external investment with debt run-up. True, Japan’s debt is held internally.
The US debt is the 3rd lowest in the developed world. Hardly anything to get exercised about.
Uncle Milton plays the game of comparing debt held by the public (the only meaningful measure) with total debt, which includes intergovernmental debt, which is meaningless. Intergovernmental debt is where the government borrows from itself, for instance dipping into the Social Security trust fund. It’s not an important debt measure and it’s never used when comparing comparative debt burdens between states.
Why do deficit hawks constantly bring up the meaningless intergovernmental debt? Because it produces a nice big fat number that scares people and makes them want to make the budget cuts that the deficit hawks slaver over. A phony number, but a big number. Another phony game they play is to add up all US federal debt, all state and local debt, and all consumer debt. Then they come up with some number that says that the US has more debt that any other country on Earth. But that’s not a meaningful or important measure last time I checked. It’s just another phony game they use to scare people into making cuts.
A number that is typically tossed about is 100% of GDP held by the public. At that point, you start running into the risk of a debt crisis. At the current rate of growth, our debt will hit 100% of GDP in 2074, and that is with a fake deliberately low rate of economic growth projection from the Congressional Budget Office. The CBO deliberately made up this fake low rate of growth in order to justify heavy spending cuts. So we will hit a possible crisis in 2074. Is that anything to get exercised about right now? I think not.