"When a young couple goes crazy with their credit card spending, the consequences are brutal. From that point on, way too much of their family income goes to paying interest on their debt instead paying down the debt itself. In the case of our Federal debt, we taxpayers end up sending money to China who holds much of our debt instead of using it to address critical priorities at home. I love how some Conservatives like to rail against fraud in our food stamp program. We need to cut this kind of crap out of our federal spending, right? Well, we spend over $220 Billion annually on our Federal debt which is more than our entire food stamps program."
There are a couple of things that make our federal debt a little more complex than your analogy.
The first is, credit card debt for this couple is a problem if they are borrowing to buy either depreciable assets or direct consumption. If they were to use a credit card at 15% interest to buy an asset that appreciates at more than 15% then it was a good investment. I'm not claiming that the gov't is borrowing to buy appreciable assets, but an argument could be made that their borrowing has helped MV which leads to private sector wealth creation.
2nd, and more important, is that our borrowing isn't dollar for dollar borrowing due to QE. A large portion of our borrrowing is actually printing money for the fed and they then turn around and loan it back to the government. Basically, they are inflating our currency but due to the process they are using the balance sheet stays relatively static and they are able to transfer those dollars out to consumers before the currency devalues.
Thirdly, due to being the worlds reserve currency many of those dollars dont come back for months or years. An analogy to this would be to borrow money on a credit card and then not having to pay it back for a couple of years, and when payments begin the balance borrowed is just cut by 5, 10, 20% by the creditor.
The danger in this approach is this: if all of the creditors decide at the same time that they want the balance paid off, the couple will have to sell the house, car, furniture and then get a 2nd job to make ends meet. And of course, if they are being forced to liquidate they won't get top dollar for their possessions. That's when the balance sheet goes into the shitter. You could probably use the Laffer Curve, replace tax rates and tax revenues with assets and inflation and the same curve would apply.
