Debt wrong

I was going through some old files and I found this:

This highlights a misconception among the public: that federal debt, particularly foreign ownership of foreign debt, is bad because foreign countries can use it as leverage to take over the U.S. I think this confusion arises because most people fail to realize the fundamental difference between personal debt and government debt. Most individuals who have debt have secured debt, that is that the loan they got to buy their car or house is backed up by the car or house itself. If the individual doesn’t pay, the asset gets repossessed. Government debt, on the other hand, is secured only by the promise that the government will pay when it promises to. People who buy debt in the form of U.S. Treasuries are not buying an ownership interest in the U.S. All they get is a promise. So the Chinese can never cash in their holdings in Treasures by repossessing parts of the U.S. But there seems to be paranoia, particularly on the right and from organizations like the Peter G. Peterson foundation, that the U.S. government’s debt opens us up to weakness because of the idea that debt holders are buying up U.S. debt in order to take over the country.

When I talk to conservatives, I often hear conspiracy theories about liberals selling the country to China via the sale of public debt. Whether this is what they honestly believe or just scare tactics at their most absurd incarnation is not easy to gauge. But look no further than this recent political ad fear-mongering about “China people” to show some of the wider implications of this misinformation.