Under the conditions of stagnation of production, this money could not find sufficient opportunities for investment and profit. For most of us such a thought is absurd, almost unimaginable, but then, most of us are not capitalists. In other words, the excess money got a profitable place to go. A second factor is that since the 1970s the United States has drifted ever deeper into enormous international trade deficits, buying more than it is selling. The classical remedy to even out the trade deficit, devaluation of the dollar, has been politically unacceptable.
Devaluation means inflation.
This would disturb the upper and middle income strata. It would also upset those international allies of U.S. imperialism who hold great amounts of dollars, like the Saud family of Arabia. With the expansion of the debt, however, foreign investors with huge dollar surpluses, like German and Japanese banks, can put their dollars directly into the U.S. economy. Trade deficit is thus transformed into national debt. Currencies, exchange rates, and markets are stabilized and everybody with lots of money is happy.