The name for the variable that offsets the trade deficit is called "investment", but that doesn't mean it's really an investment. Some people say that they're taking on debt to invest in an education. My brother-in-law also once said he was "investing" in a new 60 inch TV, paid for on a credit card.

The U.S. is using debt to pay for current expenses. This is enabled by this foreign investment. Roughly, China's offer over the past twenty years has been the following: "You guys are pretty good at making things, but we're young and hungry for the job. You go home and relax while we do your job, and we'll just loan you the money you would have earned. Good deal, huh?"

The only problem is that eventually they will start seeing us as a bad credit risk, stop loaning the money, and we're left with a pile of debt, some broken appliances, and no recent skills. They wind up with some bonds that they may have to write off, and a highly skilled workforce and a huge industrial base.

My knowledge of these topics isn't very deep. But the fact that the deficit is in USD should make this case different. The US is overspending in a resource that it has complete control of, so the impact of that behavior should be quite different from what a typical borrower would experience.

It's not like the US can just print more money when it needs it, it needs to raise taxes to account for money, to put money in it's bank account. Printing more money can upset the scales of deflation/inflation.. I'm not an economist, so can't say more than that.

I think that's what happens in the case of regular world economies who don't have the luxury of a reserve currency.

But if the US really did need to do all that accounting then how come they've accumulated a debt of 20 trillion?

I'm not saying that the US economy is completely immune, but they certainly seem more immune than other economies.

There are other countries with a higher debt/GDP ratio, so I'm not sure what facts lead you to assume the US is the sort of outlier that demands a special explanation. The number $20T does not seem meaningful in a vacuum.

Inflation is highly preferable to deflation. Government spending has never been according to tax income and shouldn’t.