I assume you mean US bond rates? You're assuming that's an indicator of confidence the US will be able to keep borrowing? Is it not just confidence it will make good on what it currently owes before becoming insolvent?

But alright, so we can borrow. Can we pay for healthcare and schools now?

Interest rates are, in economics terms, the same as government bond rates since the interest rates of any safe investment will always trend towards the government bond rate because of the arbitrage principle.

I can only assume you are talking about hard asset based debt... What if there is no collateral, or hard assets? Like the majority of consumer debt? Or corporate debt?

Most consumer debt is mortgage debt which is backed by assets. Most corporate debt is backed by assets. But this is government debt we're talking about anyway, which can always be repayed due to money printing. The cost is in inflation and sentiment.

Wow... That's an interesting assertion and frankly, crazy. Care to explain?

Fundamentally there is no difference is the debt at .01% or 15%, if one cannot make the payment, they are in trouble. If the holder of the debt cannot collect, they're in trouble.

Not that I entirely agree with the parent, but as you said:

> if one cannot make the payment, they are in trouble.

That's a function of cost of borrowing, not the amount borrowed.

If you also mean negative interest, than yes. Otherwise, the rate of interest is meaningless if the debt cannot be collected.

The cost of borrowing is the difference between the amount borrowed and repayed. So yes it matters. Even with negative interest rates there's principal to repay.

The Unites States will always pay the coupon. QE4 is currently supporting our record issuance in the repo market - you know, the support that was supposed to be unwound by now, but has in fact grown in position since the beginning of the year.

We will monetize our debt forever, just like Japan, until there are currency consequences. The MMT people argue there will never be said currency consequences. We shall see.

The currency consequences come in the form of inflation. So it's already happened. But if you mean real, paradigm altering consequences like what's happened to places like Zimbabwe or even Argentina, no, it'll never happen as long as demand for their products (and currencies) remains high.

So you truncate my sentence, call me an idiot and cite nothing to back your assertion?. Oh-Kay buddy.

Debt requires a payment to the holder. Regardless of the interest rate, if the debtor cannot make the payment, the rate of interest is fully irrelevant.

If the holder cannot collect, the value of the debt and the borrowed assets value decrease.

> That's an interesting assertion and frankly, crazy.

That's your quote. If you understood debt even at the level of a freshman in an econ 101 course or hell, if you've ever taken out a loan, you wouldn't have written it.

My assertion is as basic as saying the sky is blue. Want a citation for that?

Hint. Debt is used to purchase assets. Assets have utility. Depreciation is a thing. If utility is more than the cost of borrowing and depreciation over the timeframe of the loan, it's worthwhile.

And that's not even considering that governments can print money, so the consideration isn't can they pay it back, more like what's the cost to pay it back in inflation.

>> Hint. Debt is used to purchase assets.

This is true for corporate loans, but in case of federal budget most of the money borrowed are spent on things like healthcare, pensions, food stamps, etc. which aren't exactly profit-bringing assets.

Any money that goes to consumers at least partially is returned in taxes. Infrastructure is a big spending item and again, increases commerce and taxes. Government loans are also special in that money can be printed to repay them.

In the context of the US debt, this is an incredible claim.

1. It's larger than ever 2. It's growing faster than ever 3. T-Bill rates are at record lows

If 1. and 2. were false because 3. is true, you'd have a cogent point. But they aren't false. The debt situation is getting dramatically worse despite low rates, and those low rates on the perpetually recycled US debt are unlikely to hold. So when the $5T of debt Trump added is resold at 5%, and the sugar rush of his economic priming is over...yeah, it's not going to look so great.