Public deficit=private savings
Rightly said, “public deficit=private savings”, but then you have several problems you did not mentioned.
1) Whole your model speaks about Cash flow and “Public Deficit= Private Savings”, what about the balance sheet? The depletion of the asset value, caused by wrong investments?
2) What if the private savings is external of your currency region The government may lose its independence to regulate trade deficit.
3) To much “deficite-savings”, “Reduces the Currency Value=Depreciation of the currency”. It can be visible as inflation and currency depreciation or hidden, as the mountains of government reserves hold by foreign governments. (US government bonds in Chinese+Japanese safes).
4) Rightly said by LCR, the US has not only public deficit but also negative private savings. How is it possible according to your model? Probably;
a. Point 3) above
b.US economy creates continuously new asset values, that are commercialized to investors many of them foreign, like new start-ups publicly traded companies. This of course causes huge inequality in the income. This is why has the US economy the biggest inequality in income in the western world and not so much because of the tax system. I would say in contrary, in Europe my be the tax legislation more progressive than in USA, but the tax leakage is so common, (because of the independence of tax collection of each individual country, including Lichtenstein, Cyprus. etc.) that it is hard to speak about progressive tax collection at all.
c. The real estate market of USA is continuously creating new values, because of growing population and growing economy. From while to while (lately every 20 years) this market collapses, and erases the private investors asset values, reducing by it the public debt too, since “Reduced Asset Value= Reduced Liquidity”, and the government can supplement this lack of liquidity by printing money, and that’s what is happening now in USA and gradually in Europe too.
The conclusion;, at the end of the party the bill has to be paid. How the USA will pay its bill for 35 years of public deficit and reduced private savings? Probably by inflation or currency depreciation or both, or if we are lucky with some NewApple company shares or pieces of real estate.