[T]here’s one big group that’s singularly unimpressed by the size of the deficit: the world financial markets.
As big as the U.S. debt is, it’s not as bad as many other countries’ debt, relative to gross domestic product. No other country has a currency as strong or as well-regarded as the U.S. has, even with its current fiscal woes.
“It’s very difficult for a reserve currency to lose that status,” says Kristin Lindow, vice president at Moody’s Investors Service. “It takes another nation to take its place, and right now, there isn’t one.”
As long as the U.S. looks better fiscally than other nations, it will be able to finance its deficit. But that doesn’t mean it can continue to bleed red ink forever.