At some sufficiently high debt-gdp ratio, it becomes a foreign policy issue and a big one. Postwar UK had a high debt to gdp ratio, and to this day it is a fine place, but that debt meant the end of England as a world power, for better or worse. The U.S. for instance used financial issues to push England around and they basically had to give up on their overseas commitments. A very high debt ratio here would mean the end of the U.S. as a global world power, again even if gdp does OK. A global power needs the option of spending a lot more, quickly, without asking for anyone’s permission. Your mileage on a U.S. retreat from the global policeman role will vary, but it’s the elephant in the room which hardly anyone is talking about.
I don’t know if I really agree with the chain of reasoning, but it’s worth considering. I have been thinking about whether the effect is utility-enhancing or detracting from the POV of humanity in general for a while now. In some senses, having no “global policeman” seems to be a good thing, and at least when you phrase it that way, it certainly appeals to my anarchic tendencies. On the other hand, if you had to have a global policeman-not because it’s necessary, perhaps simply because that is the stable equilibrium- who would you really prefer? China? I sincerely hope not.