Fellow Resistance member and very smart guy, theCL has this to say about the debt bubble in our economy:

But the era of growing bureaucracy, of the welfare/warfare state, and of illusionary wealth cannot last forever. Today, we are witnessing the symptoms of an impending "crisis of interventionism." Garrett's lesson is as relevant and valuable as ever.

The West has undermined its own security by allowing its governments to quickly grow beyond the fiscal means of their people. The United States and Western Europe have built up a mountain of debt. Deficit spending as a countercyclical fiscal policy is the least of the world's worries. The collapse of today's credit-based Ponzi scheme is mainly due to the multitude of social-insurance programs that are becoming far too costly to sustain. In other words, the crumbling keystone is not short-term expenditure but long-term debt.

Given the political unpopularity of cutting these untenable programs, it is unlikely that governments will purposefully reverse their growth.[11] There is a fast-growing addiction to credit. Western governments can be compared to drug addicts. While a drug addict can overdose, however, the government can remain high as long as credit continues to be supplied at an exponentially rising rate. But, as with any addict, the day the supply cuts short is the day that marks the beginning of a severe depression.

But wait, if government can just print money, would it not be able to pay off its debt, even if at the expense of everybody else? This is why unfunded liabilities are so important. The cost of these social-insurance and welfare programs can increase with general price inflation. Government cannot print its way out of a debt that adjusts itself to the rise in the supply of money. (emphasis added)

Washington is betting on the fact that they can continue to sell our debt to keep inflation in check while implementing all the very expensive social programs.

It is well known that China purchases a large amount of our debt. What most people don't know is that China is having it's own, and not very publicized, economic struggles as well. Via STRAFOR:

STRATFOR thus sees the Chinese economic system as inherently unstable. The primary reason why China’s growth has been so impressive is that throughout the period of economic liberalization that has led to rising incomes, the Chinese government has maintained near-total savings capture of its households and businesses. It funnels these massive deposits via state-run banks to state-linked firms at below-market rates. It’s amazing the growth rate a country can achieve and the number of citizens it can employ with a vast supply of 0 percent, relatively consequence-free loans provided from the savings of nearly a billion workers.

It’s also amazing how unprofitable such a country can be. The Chinese system, like the Japanese system before it, works on bulk, churn, maximum employment and market share. The U.S. system of attempting to maximize return on investment through efficiency and profit stands in contrast. The American result is sufficient economic stability to be able to suffer through recessions and emerge stronger. The Chinese result is social stability that wobbles precipitously when exposed to economic hardship. The Chinese people rebel when work is not available and conditions reach extremes. It must be remembered that of China’s 1.3 billion people, more than 600 million urban citizens live on an average of about $7 a day, while 700 million rural people live on an average of $2 a day, and that is according to Beijing’s own well-scrubbed statistics.

If the Liberals in Washington think China is going to be able to continuously purchase our debt and continue propping up our currency they are sadly mistaken:

Meanwhile, to boost household consumption China provided subsidies to Chinese citizens who had little need for — and in some cases little ability to use — a number of big-ticket products. The Chinese now openly fear that exports will not make a sustainable return to previous levels until 2012. And that is a lot of production — and consumption — to subsidize in the meantime. Most countries have another word for this: waste.

This waste can be broken down into two main categories. First, the government roughly tripled the amount of cash it normally directs the state banks to lend to sustain economic activity during the recession. The new loans added up to roughly a third of GDP in a single year. Remember, with no-consequence loans, profitability or even selling goods is not an issue; one must merely continue employing people. Even if China boasted the best loan-quality programs in history, a dramatic increase in lending of that scale is sure to generate mountains of loans that will go bad. Second, not everyone taking out those loans even intends to invest prudently: Chinese estimates indicate that about one-fourth of this lending surge was used to play China’s stock and property markets. (emphasis added)

China's economy is almost entirely based on exports. Mainly exports to the United States. And with Obama and his Democrat henchmen working overtime to keep us economic crises mode, the Chinese economy is going to have a hard time hanging on and continuing to purchase our debt.

If this trend continues, we could be facing a tough economic road ahead.

It is also interesting that the Chinese are predicting our recession will continue until 2012. I wonder why that is.