How soon we forget. At the end of the Clinton years, government surpluses were treated as a frightening inevitability by Fed Chair, Alan Greenspan:
Mr. Greenspan said he was concerned that if the government did not begin to curtail its revenue, it would have more money than it needed when most of its debts were paid, leading to an accumulation of cash that he opposed. He said the government needed to start planning soon because there was $750 billion of debt that would not mature by 2011, so cash accumulation would begin by then, based on current projections, even though some of the debt would remain unpaid.
It would be interesting to see a country like the US buy so many bonds of another country that it effectively owns the other country in the end. A nice capitalist way to expand your country.
Government Bonds are not like equity. You could own every single Treasury Bond and still not have any claim of ownership. Obviously governments still try to appease the bond markets but that is not due to obligation, it is self interest.
How so? China owns ~10% of US treasury bonds, which makes them the largest single holder of Treasury Bonds. This does not mean they bought anything other than a promise for repayment at a stated rate.
Mr. Greenspan said he was concerned that if the government did not begin to curtail its revenue, it would have more money than it needed when most of its debts were paid, leading to an accumulation of cash that he opposed. He said the government needed to start planning soon because there was $750 billion of debt that would not mature by 2011, so cash accumulation would begin by then, based on current projections, even though some of the debt would remain unpaid.
Source: http://www.nytimes.com/2001/01/26/news/26iht-fed.2.t_1.html
The Bush Administration figured out a couple different solutions to this problem.