[expat_panama]

We're mixing up two different subjects here.  Public debt is the US gov't selling bonds to finance federal spending.  The bonds are not secured and if our gov't defaults then the only thing the creditors can do is stop loaning any more money. 

The trade deficit is separate.  Nations that trade with each other can swap goods (crops, products, services) and they can swap capital (land, patent rights, stocks and bonds).  By the end of the day (or year), if a country sells more capital than goods, it has a 'trade deficit' and a capital surplus --or vise versa.. .   One will always equal the other regardless of who's getting rich.  We're getting rich right now even though we have a trade deficit.  In 1960 we had a trade surplus and we were going broke --we had to pay off our capital account deficit by shipping out our gold reserves.   More info here.

The balance of payments is always zero.  What's important is whether or not we're getting rich.  We are.

[Carry_Okie]

The bonds are not secured and if our gov't defaults then the only thing the creditors can do is stop loaning any more money.

That's the case for American citizens. Treasuries held by foriegn investors are collateralized. I've heard Greenspan himself demand more collateral from Congress, and he specifically mentioned water. The Desertification Treaty passed soon after, by voice vote.

The trade deficit is separate.

I was asked, by sauropod, to explain how bonds, bought with the cash of the trade deficit, were a problem for Americans. So I did.

What's important is whether or not we're getting rich. We are.

We disagree. Some people are getting rich, at the expense of others.