Manny Roman argues that debt-to-GDP is an incomplete metric for debt sustainability. He suggests comparing national debt to total household savings, which reveals a vast, taxable pool of private wealth in countries like the US and Japan. This lens makes current high debt levels appear more manageable.

According to hedge fund manager Ray Dalio, the only historical path out of a terminal national debt cycle is a "beautiful deleveraging." This requires a painful but precisely balanced mix of austerity, debt forgiveness, wealth taxes, and printing money to avoid societal collapse.

Despite recent concerns about private credit quality, the most rapid and substantial growth in debt since the GFC has occurred in the government sector. This makes the government bond market, not private credit, the most likely source of a future systemic crisis, especially in a rising rate environment.

The common debt-to-GDP ratio inappropriately compares a balance sheet item (debt, a stock) to an income statement item (GDP, a flow). Laffer argues for more accurate comparisons like debt-to-wealth (stock-to-stock) or debt service-to-GDP (flow-to-flow) for a proper assessment of a nation's financial health.

Investor Ray Dalio explains that national debt reaches a crisis point not because of its size, but when two things happen: debt payments squeeze out essential spending, and low demand for new debt forces central banks to print money to buy it, thus devaluing the currency.

History shows a strong correlation between extreme national debt and societal breakdown. Countries that sustain a debt-to-GDP ratio over 130% for an extended period (e.g., 18 months) tend to tear themselves apart through civil war or revolution, not external attack.

Investors fixate on Japan's high sovereign debt. However, Wagner points out that the central bank owns a large portion. More importantly, the corporate and household sectors are net cash positive, making the overall economy far less levered than the single headline number suggests.

Historically, countries crossing a 130% debt-to-GDP ratio experience revolution or collapse. As the U.S. approaches this threshold (currently 122%), its massive debt forces zero-sum political fights over a shrinking pie, directly fueling the social unrest and polarization seen today.

Economist Peter Schiff highlights a historical pattern where countries, except for Japan, that surpass a 130% debt-to-GDP ratio experience internal strife, such as civil war or revolution. This is due to the inability to fund government programs, leading to societal breakdown and extreme political polarization.