The reality is that the USA will never have trouble 'selling' its bonds, because the federal reserve just buys them if nobody else will or it wants to drive down interest rates
- I absolutely agree with you, which is why the bond collapse will happen as the result of the currency crisis, which will result from this inflation.
Essentially the fed, ECB, BoE are saying to savers go and spend your money, stop hoarding it. But savers are not listening so aggregate demand is still broken.
- of-course people don't want to spend on bonds and stocks that is the 'demand' we are talking about, let's be clear about it. People are not buying the bonds and stocks that governments want to see selling.
The reality is that the inflationary policy is destroying the economy and a destroyed economy will collapse in its own right, the currency collapses because of the government spending that the mob wants and the economy collapses due to this gigantic misallocaiton of resources. The currency collapse triggers the bond market collapse, since bonds are currency promised in the future.
Japan is stagnating specifically because it is inflating like the USA but its currency is NOT the so called 'reserve', and so the inflation that Japan is producing stays within its own borders, it's absorbing its own inflation and destroying its own economy.
The USA is using the status of the 'reserve currency' to spread the misery around, spreading inflation is national past time, the biggest USA export is its inflation, which creates inflation everywhere else before taking home back to the USA. This is happening of-course anyway, it's manifesting itself as destruction of the productive sector, gigantic real unemployment, class warfare, bubbles in everything everywhere.
The 0% Fed's interest rate for 7 years put USA economy on the inflationary needle and this drug will not be kicked without a huge collapse first, no junkie kicks his habit before hitting the rock bottom.
The clear best answer for the economy in general is free market and removal of government from money and interest rate manipulation, abolition of the welfare state and restructuring of all debts. Whether saving is worth more than borrowing is a question to the healthy free market, something that USA lost long ago.