So in other words, you believe that financial problems are caused by too many assets? Because that's how a balance sheet works.
Then the debt is equally meaningless. Maybe you should try applying financial principles, rather than reading Zero Hedge.
Note the US Federal government owns so much land in the Western part of the country and Alaska that that alone might allow it to get its fiscal house in order, and could certainly help.
I mean, isn't it everyone's dream to have title to a plot of Alaskan tundra ^_^? Obviously it would be very hard to make this work, and impossible for our current ruling class, but the raw numbers just might work out.
Otherwise you're right, it simply won't be paid back. But who knows how long we'll be viewed as a "least worst" place to park your liquid assets?
Private debt is the issue. Steve Keen has been hammering this for years:
https://www.youtube.com/watch?v=CLplU4WdX9A
Corporate private debt is maybe the next worst, but as I said corporations have many more tools for dealing with it especially if they are otherwise healthy. There's a huge market out there for equity in healthy and especially growing companies.
I have heard the interesting view that government debt and private debt are not even the same thing.
When you think about it: the government prints its own money (or authorizes the entity that does, e.g. the Fed). How can you truly owe a debt in your own sovereign (fiat) currency? How is debt still a meaningful concept there?
It seems to me (and IANAE) that government debt is more like equity in the nation. Owning a bond is like owning stock in the USA, but with the caveat that you are forced to resell this stock at its maturity date. Maybe something closer to a weird kind of convertible note.
I still think debt is a meaningful concept there, in that that that debt is going to be relied on by the holders to provide an income in the future that they are thinking of in terms of a reasonable increase in the general money supply and inflation. It's not a black and white situation as with personal debt and I'm certainly more sympathetic than I used to be to the idea that excess sovereign debt isn't a serious issue (as long as the sovereign controls the underlying currency, looking at you Greece).
On the other hand, I think the same analysis tells us that the sovereign should just print the money and distribute it (via, say, a citizens dividend or Keen's modern debt jubilee) rather than rely on the banks debt-creation mechanism.
It's the countries that can't devalue and print a little to ease their situations (Euro countries other than Germany) that are in trouble. Then there's the countries which are dependent on fossil fuel exports for their budget (Saudi and Russia, but also Brazil and Venezuela among others). Then there's China's economic structure, which has far more pretending in it.
The US is fine unless another Republican Congress decides to blow it up with the debt ceiling.
It has a debt-to-income ratio of 14.3, the highest possible credit rating, and assets that far exceed debt. Lenders would be tripping over themselves to lend to to such a household, and lo and behold lenders are tripping over themselves to lend to the USG.
This dour anti-debt Puritanism is dumb enough when it comes to individuals, but makes no sense at all when it comes to government.
The problem is private debt, particular private debt that doesn't self-liquidate (consumption). See Steve Keen (certainly no puritan on debt) on the distinction between public debt and private debt and its effects on the economy.
How much of the budget can truly be scored as investments? Perhaps not even the bulk of student higher education loans....
Keen is very good on this and has convinced me, despite it going against my inherent anti-debt biases.
Of course the Federal Government isn't a "giant household", it's worse in many respects, with the decision makers generally not thinking past the next election, whereas there's a chance in a household the elders will be thinking of the children's futures (things like Social Security, and the general Zeitgeist that the government won't do stupid things like repudiate the debt, have of course helped to sunder the bonds between generations, something I think a lot of "elders" will heartily regret in due course).
And it would still be just as sovereign as it is now, or are you claiming it's not sovereign over the Eastern part of the country???
Or course, there are many other gambits it could and likely will try, like the already mooted one of seizing people's tax system entangled retirement accounts.
Hell, while they're at it, why not sell off the exclusive economic zones, permanently sell off bandwidth rather than lease, turn the military into a contracted mercenary force and sell naming rights to the Washington Monument.
There are worse things than defaulting on debt.
Inflating assets via QE doesn't really address the real underlying problem.
The only long-term solution I have seen is Debt for Equity swaps. It won't work everywhere, but it does help.
For example, when the Banks were technically insolvent then the opportunity should have been taken to forcibly re-arrange their financial underpinnings rather than shoring up the existing rickety structures by using taxpayer monies to in effect bail out the rich.
https://en.wikipedia.org/wiki/Debt_restructuring#Bondholder_...