How is the US government debt the problem? I just don't see it. Government debt certainly didn't cause the problem, we can still borrow at a 2% rate, and there's been little evidence of inflation.
I'm in the middle here. U.S. and State debt is a huge problem IMHO but I agree that private debt is a bigger problem (given it dwarfs public debt by a large margin).
But the one point where I think you're clearly wrong is using interest rates or lack of inflation as measurement sticks. As long as the U.S. holds the reserve currency we have the whole world trying to prevent our currency from collapsing. That means giving us whatever interest rate we want and pegging their currency to ours.
I suspect we'd see a major collapse in the dollar if the world decided to abandon it as the reserve currency.
The US government is able to borrow at a low rate because there are few good alternatives: the Euro and the Yen are both terrible choices, the Pound is not particularly good either, the Australian market is too small to absorb significant inflows, and the Chinese market is not open to foreign investment. As the Chinese open their currency over the next few years and present it as an alternative reserve currency to the dollar, the free ride will start coming to an end and the US will need a significant devaluation in order to keep from choking on the higher rates. It would be better to have the debt under control when that happens.
