The Strategic Problem of Debt

" Brad Setser wrote a fantastic report last September highlighting the strategic problem of borrowing. In it he argued that too much debt will constrain our policy options. That’s a polite way of putting it. If there’s a run on the dollar, many policy options won’t simply be constrained. They’ll be eliminated. Yes, our creditors would also suffer from a run on the dollar. But Setser argues that we would suffer far more."