I'm very curious why debt should be repaid at all, care to explain?
(Note: I think one's own debt is different than the debt in an economic scale)
The entire monetary system is built off the idea of trading goods and services that are the products of human labor. Things like automated assembly lines are a precursor - when we had 3d printing, you remove all human factors in the creation of goods besides the raw resource acquisition, and sufficiently advanced printers can also decompose trash into reusable pieces so you don't even need raw materials any more besides power.
All our financial woes and economic malnourishment is the product of this system, beneath government welfare overspending the budget, it is why corporations post record profits while laying off thousands and why all that money goes to the top of the management. When the actual consumable and usable goods are not produced by people, the sale of individual units breaks down.
Look no further than media. Media is an upfront cost of creation, but reproduction is free. The current system is so broken because it tries to charge per unit as if unit production has an associated cost, where the cost is the funding, not the distribution. That problem only gets worse as we automate everything more and more (automated cars replace drivers, 3d printers replace small scale manufacturing...).
That leads to a big one. Automated mining and farming. Fully, with no human intervention, where you can set off a robot with some pre-programmed track of land to till or dig and it will extract all the resources from that area for you. Once that happens everything goes out the window, because a single point of sale unit of production (plus maintinance, which then gets ursurped by the singularity making machines improve themselves) where once one of these machines is available, resources are no longer scarce.
And then money breaks down. Because when human effort is no longer involved in the day to day operations of goods production, there is no continuous "cost" involved anymore, in the terms the Reddit thread describes, or how most people interpret goods and labor.
Crucially, and this is where the whole utopian post-scarcity dream falls apart, the cost of making movie B doesn't significantly depend on the cost of movie A. Because a movie isn't a "thing". Movie B is a different thing than movie A.
The economic problem here is fundamentally one of information and cooperation. As far as we know what we want we should share the cost of producing it (i.e. production should be of what is known to be wanted, and cooperation should be on shared goals). And where we do not know (e.g. the future) we should not prevent unpredicted gains from what has been produced (i.e. by charging for copies).
The practical problem is how to get information and how to promote cooperation -- this is where possible arrangements can vary. But the core theoretical structure is that our production should follow from information, and our consumption should not be hostage to lack of information -- this is what all arrangements should try to achieve.
We don't "need" to work more. The USA produces a substantial excess of food, even past the excessive eating habits causing the obesity epidemic, and we sell electricity to Canada and Mexico since we are completely self sufficient there as well. Almost all of our electrical infrastructure is 40+ years old, grossly outdated, but the initial costs are effectively gone. The cost of power is just the million year old dead plants to make it.
The problem is we have no social construct to distribute these non-scares resources in any way but through exchanges that treat them as scarce. And we still have farmers toiling in fields and operators of power plants that need to be compensated for their labors.
The system really evolved to combat Communism. The powers that be ran with the propaganda wars of the 60's and turned the USA hyper-consumer with tons of debt to combat Russia's ideology. Everyone jumped on board because socialism and the "other" were irrationally dubbed wrong and thus we must do the opposite.
Also, food is becoming more expensive faster as the reality that only 1% of our population produces the resources we need to survive and prosper sets in. Make that 2%, 1% to make food and power and 1% to maintain infrastructure (poorly) and keep a functioning supply chain in place.
The rest of us? Effectively useless, and where we should be trying to invest the largest fraction of unbounded intellectual freedom to innovate and create in history to get us some freakin starships and immortality and super AI, we squander it with an outdated economic model that has millions sitting at desks twiddling thumbs or manning store counters because they have no choice if they want to eat and have a bed.
In the end, the best things we can aspire to are just not profitable enough for the system in place, so we wallow with a population grossly underutilized.
A few months back I would have said the same thing. Then I watched this: http://en.wikipedia.org/wiki/The_Century_of_the_Self
It actually appeared to start post WWI, just the Cold War accelerated the effect.
The kind of mass consumption spawned from the US that has people sitting in front of their TVs 6 hours a day on average, obsessed with celebrity, eating fast food, getting fat, buying and hoarding tons of junk they hardly even use, being seriously in debt, working jobs they hate to keep the cycle going... stuff that is actually deleterious to physical and emotional health? No. And that documentary brings context to how this mess came about.
Just give it the first 15 minutes and find out how one man behind one public event changed the perception of women smoking forever:
"Bernays staged the 1929 Easter parade in New York City, showing models holding lit Lucky Strike cigarettes, or "Torches of Freedom". After the historical public event, women started lighting up more than ever before. It was through Bernays that women's smoking habits started to become socially acceptable."
http://en.wikipedia.org/wiki/Edward_Bernays
This same man, the double nephew of Sigmund Freud, also coined the term PR and got his start as a propagandist for the Wilson administration during WWI.
That's a good cognate to David Graeber's description of neoliberalism: a program of governance designed to bring down Communism and hail the glorious victory of Capitalism, no matter the actual economic consequences of doing so.
Ultimately, bonds, like much else, are priced by the market. A $1000 bond is only worth $1000 if the issuer does not go bankrupt before the bond matures. Therefore, the bonds are discounted by some amount that correlates with how high investors think the risk is that it will be paid back in full.
A concrete example: Spanish 10-year notes. At the start of the year, investors demanded about 5% interest to account for the risk that the Spanish government would not be able to repay its debts. This means that for the Spanish government to raise €1000, it has to pay investors €50 every six months. However, this week that rose to 7%, effectively increasing the amount of debt the Spanish government must take on to raise the same amount of money.
This effect can create a death spiral (as we saw with Greece) where skittishness in the market raises the cost of borrowing, which unnerves investors even more.
So there's no way for investors to force the government to pay back all the debt. However, they can make it impossible to raise more money in the future.
A US defective of $10T required 6% of the federal budget to service in fiscal year 2011. Currently, accrual of debt is outpacing both inflation, and increases in revenues.
This might still be fine _if_ the additional debt has a positive impact on GDP growth, but that's not entirely obvious. Japan has been in a similar situation for two decades. 25% of their national budget is used for servicing loans.