America might have too much debt for its system to cope with.
No, not the financial system. Sure, at $16.7 trillion, the US government has a lot of debt. But despite what you might hear, America is not bankrupt, any more than a homeowner with a mortgage is bankrupt. In fact, thanks to healthy buying from Japan, China and the US Federal Reserve—not to mention a worldwide scramble by investors in search of safe places to put money—the US can easily and cheaply borrow any money it needs to meet its obligations.
No, the system we’re talking about is not the financial system—it’s the democratic system. Maybe America’s awesome ability to take on debt is actually weakening the country’s willingness to pay it back. And maybe that’s why the nation’s hard-won reputation as a near-pristine borrower is starting to crumble in what may be an unsettling new chapter
of America’s 223-year relationship with government debt.