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Politics : View from the Center and Left
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To: neolib who wrote (54266)3/17/2008 6:34:13 PM
From: TimF  Read Replies (1) of 542665
 
They can buy t-bills, for a short time they we could print money (wouldn't work out well but it can be done), or the other countries can buy US assets.

In any of those cases the deficit itself is not a debt. It leads other people to have extra dollars, and one use of those dollars is to loan them to Americans (not just T-bills but also purchase of private bonds, or other types of loans), but that doesn't make the deficit itself a debt, even if every dollar went in to T-bills, and the cycle repeated endlessly.

And of course its not the case that every dollar goes to bonds or loans. Other companies buy stock, buy land, or as the dollar declines they might be more likely to buy some American products with the dollars from previous sales.
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