First, the U.S. is a sovereign issuer of the world’s reserve currency. As such, the U.S. government cannot run out of money in a manner that a business or individual can. Debt rollovers, global demand for Treasuries, and flexible monetary policy all work to prevent a fiscal collapse. I am not suggesting that rising deficits and debt levels are NOT challenging. As we will explain momentarily, debt impedes economic growth. However, rising debt and deficit levels do not make bankruptcy inevitable.
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