Is this actually true and if so, should I be worried about a default since I own quite a few US bonds? I can't see how this is sustainable at all. I asked my financial adviser and she laughed.

What am I missing?

closed as off-topic by gef05, Ben Miller, Chris W. Rea, Dheer, JoeTaxpayer Jan 22 '17 at 1:22

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  • What are the measures of GDP in the same years - leading to what is the ratio of debt to the overall economy? What is your political assessment of the current Congress to not act in the face of a potential default while they control both the white house and Congress? – user662852 Jan 21 '17 at 20:35
  • It looks like the numbers are roughly accurate. But the question of whether it is a problem, and what exactly the problem will cause, is primarily opinion-based. – Ben Miller Jan 21 '17 at 21:51
  • 1
    Government bonds, especially in the US, are pretty well protected regardless of what is going on. The reason is that unless your government is failed like Greece, then your government backed investments will generally be protected or they lose credibility and credit worthiness, so a big giant like the US will almost never default on it, regardless of rhetoric and talks of shutting down the government. This is generally why government bonds are considered "safe" investments that even large financial institutions use to hedge their risk exposure. – GµårÐïåñ Jan 21 '17 at 23:38

The interest payments on that debt is much lower. The debt is in the form of bonds, which people want, just like the bonds you own. People willingly give their money to the US Government whether it needs it or not.

The US Government creates more bonds, which it exchanges for other people's money, because there is an insatiable demand for US government bonds from people like you.

Yes, the US Government uses new investors to pay old investors.

It simultaneously has several avenues to service the debt (to pay it off). Even in the event of less demand from new investors, or a constriction in the governments revenue streams, it has a large and diverse portfolio and resources that it can tax and take to pay the old investors, preventing it from default. You'll hear the word 'austerity' long before there is a real need to worry a consequential default. (The US has missed payments several times, but they were inconsequential, as it was more of an administrative hiccup than lack of funds)

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