I'm not literally claiming that treasury bonds are USD or create them directly, but every time anyone gets a bond, they act the same as if they have dollars in savings. They aren't liquid USD, but your bonds you have saved mean you have that savings and don't need to save as much in other forms.

As long as people trade in bonds for more bonds, the creation of USD can be delayed indefinitely. But if everyone went to cash in their bonds all at once, it would force the government to effectively print USD because they would not opt to default instead.

The only other alternative would be to increase taxes (or reduce new spending) to avoid the net increase in USD. And, I guess that's what people think about when they worry about future generations being liable for the debt. But the point is that it would just be stupid for policy-makers to sabotage the citizenry just to keep from creating USD.

In the case of the debt coming "due" because enough bonds are cashed in at once, the policy decisions around that would be about coming up with the right spending and taxing plan to keep things going okay. That's where all the challenges lie. But among the tools that are available for what to do include the ability to (e.g.) print new dollars to give to all U.S. taxpayers (or just citizens?) to offset all the new dollars going to China etc.

So, China cashes in their bonds. Now they have a ton of USD they could save or spend etc. — maybe we think it's a safe calculation to undermine their spending power by giving more USD to citizens. Maybe we think that will undermine China's trust in the future (but they are already cashing in their bonds, so maybe they lost trust already). Maybe we tax exports to China… maybe that's a terrible idea.

There's all sorts of ways to fuck this up, and maybe it is a problem currently that we're spending via issuing Treasury Bonds instead of printing more money now (i.e. we are delaying dealing with the issue of printing money). There's real concerns.

But the one concern that doesn't exist is the one that we will default. However we avoid defaulting, it will have policy effects, and that's where we should be discussing what effects we should aim for and where unintended consequences may lie etc.

There's at least an argument that we should screw China in the long-term rather than screw our grandkids. We don't have to literally default on the debt, we can just devalue it by allowing inflation at the same time as we give new USD to citizens (or just let citizens keep more of what they already get by cutting taxes). Etc. etc. none of this part is simple.

> Government spending is bad because it inherently is not an investment in future wealth production

But that's not the definition of whether something is good or bad. It's also not a direct investment in future wealth production if I consume something, and we don't say that all consumption is bad. Most consumption is bad at being investment.

So when government spending is not an investment in future wealth production, what is it? It's, as we seem to both understand, a market distortion and/or wealth redistribution of some sort. Obviously, in any perspective where "the point is to distort the market" the idea is to distort it from worse to better. No theory says that any distortion is good