So now we replace bad private debts with bad public debts - have we really solved anything?
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Yes, because unlike any private individual or institution, the government can ALWAYS raise money through taxation. So, theoretically, public debts will always be paid back. BTW, if you wish to bitch about the level of public debt, direct your ire at Ronald Reagan and the two Bushes. The public debt went from about $1 trillion (all debt from 1789 to 1980) to $10 trillion (circa Obama inauguration) because Republicans wanted to "starve the beast".
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However it raises the probability that the government can default on these loans. The us government already has a lot of debt to service. This will increase the share of the budget allocated to the service of the debt.
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