But that sounds bad! Why should we be borrowing all this money from foreigners when we’re a rich country? What if I want the U.S. to build stuff, instead of moving money around and trying to “influence global politics.”
I’d also love a sane domestic politics that acknowledges that borrowing money from foreigners every year because we can’t square our spending with our taxing is a bad thing.
Taking out a loan and promising to repay it is a voluntary exchange of value that markets are comfortable with -- to issue debt is to play by the rules. Printing money directly is just an exercise in pissing on the users of that currency. People don't want to use currencies that do that. When people buy US debt, they are implicitly validating their trust in the currency to be paid back later.
It is related to the general definition of inflation.
Those with existing assets (including retired folks in the US) theoretically "lose" in this situation.
You can split the US and see inequality arise from printing: (1) US federal govt vs non-govt entities (2) US citizens with assets vs US citizens without assets, (4) people who received money first vs people who last bits of the "trickle down".
In various cases, certain people "win" and others "lose"
Because "borrowing" money 1.) recycles foreign dollars back into the US economy 2.) maintains foreign interest in accepting US dollars for goods and thus sustains US trade deficit 3.) prevents idle foreign US dollars that would other wise buying US assets that then inflates their price (eg real estate)
Okay, but then doesn’t that undermine your point about the importance of the US being the world’s reserve currency? What does that matter if most of our debt is to ourselves anyway?
Japan runs huge structural deficits and most is held by its own citizens.
Basically this is why times have been great for industries like finance and tech in the US, but sucked for manufacturing. In turn leading to wealth inequality and, dare we say the class struggle that seem to have reached a boiling point.
I’d also love a sane domestic politics that acknowledges that borrowing money from foreigners every year because we can’t square our spending with our taxing is a bad thing.