Yea this is never going to happen in our lifetime.
Practically though we build new houses because old houses tend to not be in places we want them to be, and are not large and nice enough to our liking.
The public debt is just a number, it's the accumulate of pass deficits and it's not inflationary in itself and it's not a problem.
A mental experiment (not so hypothetical): suppose that in order to fight an economic crisis the government decide to spend a big deficit and, in order to do it, they emit bonds. Suppose now, that the Federal Reserve buy all those bonds. Who is that money owned to? who receive the dividends of those bonds?
A second mental experiment: in order to not increasing the public debt and "save for our children" the government don't spend in infrastructure or investigation. In 50 years there is not infrastructure left or new technologies but the public debt is zero. Are the children rich or poor?
What we ended up with is a situation where almost all the wealth/value we (governments, businesses, the people) have built is represented in terms of 'monetary units' (the numbers in the computer), but it's increasingly clear that in the future, these positive and negative numbers will never add up to zero anymore, and we're not going to 'grow our economies out of debt' as was originally the idea of taking on debt now to invest in the future. This means someone is going to lose big time sooner or later.
Printing more money to take some negative numbers from the economy and infusing it with some positive numbers is not a strategy that can save the system in the long term as there are exponential terms involved because of interest. There will be a point where diluting the the money supply (which is exactly what QE is) will result in a loss of confidence people have in the 'numbers in the computer' being a reliable proxy for their wealth. Governments will have a hard time selling treasuries when no-one expects them to have any value in the future. When that happens (which IMO is just a matter of time, how much time is not clear but most definitely not 100+ years) all value that is not recorded in tangible, useful assets or skills will simply disappear, and it will not just mean the 'numbers of the computer' have to be adjusted or reset and everything can go back to normal...
Not really, the history of money doesn't support that theory.
>>"[..] it's increasingly clear that in the future, these positive and negative numbers will never add up to zero anymore,"
They don't add already, never were suppose to add. Where is the dollar coming from if not the deficits of government? The spending of money in the economy is what creates money. So, it's the debt of the public sector what create the money in the first place. You are complaining that excessive deficits are creating too much money, so you already agree with that.
>>"[..] Governments will have a hard time selling treasuries when no-one expects them to have any value in the future. "
That makes zero sense. The Central Banks can, and frequently do, determine the interest of the public bonds. Japan is the main example, but there are many others.
>>"[..] all value that is not recorded in tangible, useful assets or [..]"
A government tax every transaction in the economy, and can do it because it has the monopoly of force in that country. If the USA government only accept dollars for paying taxes, there will be always (while there is an economy and they keep the monopoly of force) demand for the Dollar. The same is true for all the other countries.
To Federal Reserve of course, which will receive the coupons. To be sure, taxpayers will pay the principal and interest down the line.
> In 50 years there is not infrastructure left or new technologies but the public debt is zero. Are the children rich or poor?
Lack of government-built infrastructure is seen. What is unseen is all the other things that the money saved on government-paid infrastructure paid for.
Money is a claim on resources in the economy, and if the government doesn’t claim its share and use it to build infrastructure, these resources do not disappear. Something else uses them.
But I'd be less worried if these debts were to build infrastructure (and we'd have some incredible infrastructure). That's my real concern here: we borrowing to maintain lifestyles not to build useful things.
Your point about Japan is really interesting. I heard things were moving that way but I didn't know they were so up front in recognising it. I love the Japanese. Here in Europe we're in a similar position but no one quite wants to admit it. And we borrow still, we just give it all to OAPs :(
Only if you squint _really_ hard, have near-religious faith in technological advancement, and ignore all the ways we're making the planet increasingly difficult to live on.
I think we're beginning to see this in the US. In a few years, you won't be able to live in New Jersey and commute to New York City, or take the train from Boston to Washington D.C. The North River Tunnels will have collapsed, because we can't find any money to repair them.
Ultimately, it's a little disingenuous to say this is "selling your children". Yes, if we keep buying stuff, someone will have to pay for it. If society takes on projects that need to be paid for over 100 years, people that aren't born today will be spending some of their taxes on it. But with the right investments, it's almost certainly worth it. We can look back at some of the achievements over the last century and find that they probably grew the economy more than they cost, which makes them good investments when paid for collectively. In 1920, we didn't have an Interstate Highway System, we didn't live in the suburbs and commute to the city, we couldn't fly to the far corners of the world in 16 hours, we didn't have all of humanity's knowledge available in our pockets. There is no reason to believe that 2120 won't be just as good as long as we keep investing.