The national debt is a critical medium that most modern countries use. The idea of an American national debt was primarily espoused by Alexander Hamilton, who believed that a well funded debt, funded via bonds(loans) and credit, would be a great asset for the country as a whole. The national debt would and is used as a way to manage the country's liquidity, meaning it is prudent to run a larger deficit when the money supply is particularly low. It increases liquidity because the banks use the bonds to serve as collateral for servicing new money and bank loans, multiplying the original face value of the bond. Meaning, government debt is typically good debt. The collateral for government bonds is a fine mix of taxes and bonds directly coming from the federal reserve, who gets its bonds from the mint. Via this system, the government can service all debts, foreign and domestic, and it can safely run a deficit to increase liquidity. It should be noted however, that this system only validly works when (a) the country in question has its own sovereign currency and (b) the country in question has its own national bank and mint, be it privatized or nationalized. This is why Greece could not service its debts and had to be bailed out; it does not a sovereign country. In fact, it could be argued that it is simply a state of the European Union, similar to that of the U.S. If a state defaulted in the U.S.(albeit it is unconstitutional to do so), then the government would need to bail it out as well. This system has, in turn, led to the U.S. and most other countries having a significantly stable bond system, be it used for savings or quick capital. It should also be noted, however, that it is possible for the government running this system to have its rating downgraded. This occurs when the government can't decide on how to service its debt, and this subsequently makes bond holders quite nervous about the future; if the government decides to cancel collateral, they lose their money; the bonds become worthless. This by no means means we can run an infinite deficit. Interest payments eventually becomes too high, and when the mint prints money to service the debt, this causes monetary inflation, and overtime the currency becomes worthless if the debt becomes too high, and with it the bonds it is serving for as collateral become worthless as well.