It depends… during the gold standard era (fixed exchange rate) you cannot run a large deficit without screwing up your own exchange rate.

Funny considering that perhaps the greatest economic development that has occurred in the history of humanity, happened in the USSR under Stalin’s Five-Year Plans (1929-1955) that ran very much on the MMT principles (not exactly, but conceptually similar enough). No other socialist/Marxist economies, including China which is far more neoliberal post-reform and relied on foreign capital and cheap labor, ever comes close to achieving this.

There's a Proles Pod episode on MMT just came out that seems to do a good job. I still can't 100% wrap my head around it but I'm getting there

The debt are bought by banks because every time the government spends (creates new money), it also creates reserves in the banking system. The banks then use the new reserves to buy treasuries, which act to drain excess reserves in the system (because of interest rate targeting, otherwise you can just let the reserves build up in the system without doing anything, and not issuing new treasury bonds at all. It is a policy choice.).

The rest of it is bought by citizens and non-citizens alike who have accumulated dollars but don’t know where else to spend them (e.g. foreign central banks). Therefore the treasury bonds also act to drain the excess dollars the US has spent overseas (dollar recycling).

The only real way for the US to lose its financial hegemony is if there is another country (you know who) willing to step up and become the net deficit spending country to absorb all the surplus export capacities in the world.

Otherwise exporting economies will always have surplus goods to sell and the trade flow will inevitably lead the goods to be sold to the country willing to run a deficit. If not, workers will lose their jobs and hurt the local economy of the exporting country.

just use your military to shoot the credit raters, why didn't anyone else think of this??

Spend less on military

you gotta run the govt budget like a household. no wait, not like that!

Unlimited QE or devaluation erodes the dollar’s purchasing power and credibility.

This isn't necessarily true. As I said, bond purchases isn't money printing but rather an asset swap, swapping one asset, treasuries, with reserves, it doesn't create net financial assets. That's what fiscal policy does.

While the US won’t run out of money, unchecked debt could trigger stagflation, a dollar crisis, or a loss of geopolitical leverage.

No it won't. Private debt isn't same as public debt, what I said applies to all countries with sovereign currencies, look at Japan's public debt to GDP ratio. The 1970s stagflation was in large part due to oil price shock and capitalists/workers fighting over real output.

Credit ratings agencies have downgraded JGBs many times in the past yet yields remained low and demand for these assets high. 1 2 3 4

Another good example was Italy, before they joined EMU Euro. Credit ratings agencies downgraded Italian Lira debt because ' fiscal trajectory', 'Unsustainable path' yet they never defaulted on Lira debt. This was despite low growth, and high(er) inflation. There was no risk of default in the first place.

While Moody’s critique conflates the exchange rate and credit risk, they’re still connected. A weakening dollar makes dollar-denominated debt cheaper for the US to service, but foreign holders like Japan face losses.

U.S. sovereign debt can always be serviced, as I said, it's not really debt. It is debt in the same way cash in your wallet is debt, except that there is interest, which is a basic income to bondholders.

If markets anticipate perpetual devaluation, demand for treasuries could collapse, forcing interest rates up and destabilizing the economy.

It won't, short term rates are set by the Fed, and if the interest rate goes beyond its tolerance it has to soak up excess debt to maintain its target rate. Demand for treasuries will always be there because even if foreigners don't want it, Americans do as it is a risk-free asset.

If they dump Treasuries to cut losses, the fed would have to monetize debt at scale, risking hyperinflation.

No, if they dump Treasuries, they lose their foreign exchange reserves and as the exchange rate depreciates, they'll get less and less of whatever other currency they are trying to buy. The reason why Chinese and Japanese central banks have reserves in the first place is because they buy up excess Dollars in the forex market so as to maintain trade competitiveness (real effective exchange rate).

If the US unilaterally alters debt terms extending maturities or capping rates, that also signals unreliability.

That is an actual voluntary default. Not the same as exchange rate risks.

Foreign creditors, who hold 30% of US debt, could exit, triggering a liquidity crisis.

There won't be a liquidity crisis, U.S. Govt is always there to supply liquidity if needed.

Oh okay