“The govt is like the family in 2007 riding a wave of false prosperity based on maxxed out credit cards and helocs on a house with negative equity.”
It’s way worse than that. Aggregate debt and unfunded liabilities for federal state and local government now amount to $279 TRILLION. GDP is less than $16 T. U.S. net worth is $72 T. Imagine being a homeowner who tried to borrow an amount equal to 17 times the family’s annual income, or who tried to get a mortgage equal to nearly 4 times the market value of a house. No sane bank would make that loan.
The only way government gets away with this irresponsible behavior is because it can print money ad infinitum. It need never go broke, as it can simply inflate away its debt by paying it back in dollars worth far less than were loaned to it decades ago. But that presupposes lenders stupid enough not to quickly figure this out. When foreigners wake up and stop lending, the party will be over.
Forgeign lenders are in the minority. The bulk of US debt is held by private Americans. China holds less than 8%, by comparison.
As usual, the responsible ones, the ones who save and invest, will be screwed by the rest. And it won't stop until the whole thing collapses.
“When foreigners wake up and stop lending, the party will be over.”
They already have. Most of the debt is purchased by the Federal Reserve.