How bad is the accumulated US debt to the world economy?-
When the day of the US debt repayment comes the government will have three ways to repay it, either to increase taxes, to cut budget or to print money. Eventually which way to go will depend on the situation, the economy will be in the day of the repayment. If the unemployment of production capacity prevails, the government will do it by printing money, if the economy will be at full employment or close to it, it will rise the taxes or cut the budget (probably both). This government step would be necessary anyway, without to consider if there is need to repay debts or not. So the problem how to repay the domestic debts in the future in reality doesn’t exists.
As to the bonds owned by the foreigners, this is mainly the foreigners problem (about half of it is of Japan and China). If they stop to purchase the bonds, it will cause depreciation of the US dollar against their currencies, assuming that production capacities are unemployed, this will increase the US exports and employment. If the production capacity will be fully employed, the depreciation of the US dollar will cause inflation, with it reduction of domestic consumption and depreciation of the value of the US debts in real terms. Again the foreign bond holders are paying the price. If the foreigners not only stop to purchase new bonds but start to sell the old once in huge scale, the effect will be in the same direction, but with much bigger and immediate response. This could be very devastative to the whole world and not only to the US or the foreign bond holders economy. Let us all pray, they don’t come up with such a policy.
As mentioned above, the main problem with the huge US government debt is, that it was created to finance increased households consumption and government expenses, (mainly military), and not to finance investment to create additional potential capacity for future economic growth. To whom it is not obvious, increased government expenses used for education, health, infrastructure, are all investments with positive effect in the future potential economic growth, military expenses are not. (I don’t count the development of technology, that is side product of the military budget, since this aim could be achieved more effectively by investing directly into science and high education.)
The main problem of the government debt is the growing interest rate, the government has to pay on its debts. This may negatively influence its fiscal economic policy flexibility. The solution to this is repurchasing government bonds by printing money, and if this step would cause inflation pressures, it can be corrected by increasing to the commercial banks the demanded minimum reserve requirement rate, that would cause credit squeeze.