Editor’s note: Today, Porter turns the Journal over to Distressed Investing analyst Martin Fridson. Marty spent years at leading firms like Salomon Brothers, Morgan Stanley, and Merrill Lynch – researching debt and how it’s collateralized.

Here’s Marty…

The U.S. doesn’t have a debt problem…

U.S. President Donald Trump recently tried to reassure the American public about the federal government’s fiscal health – but his message is likely to have the opposite effect on those who understand how sovereign borrowing works.

In an interview with Fortune, President Trump argued that the level of federal debt – currently $39 trillion – isn’t really as terrible as people are making it out to be. He said the total value of America and its natural assets, such as the Grand Canyon and the surrounding oceans, is “like hundreds of trillions of dollars.” According to his logic, the U.S. is “way under-levered.”

This reasoning would make sense if government finance worked like the real estate business, where Trump has spent most of his career. If the buyers of U.S. Treasury bonds lent against collateral, they’d escape financial ruin in the event of a default. They’d just sell off the Grand Canyon, a few national parks, and the Atlantic Ocean and recover at least a substantial portion of their principal. In reality, pledging assets in the manner of a real estate developer has historically occurred in the sovereign debt market only when a country was in dire financial straits.

The buyers of a government’s bonds must rely instead on the government’s ability and willingness to pay. If the country defaults, there’s no global bankruptcy court to go to for relief.

Ever since Alexander Hamilton did the financial engineering that made it possible for the United States to come into being (he got the national government to assume the states’ Revolutionary War debts), our nation has had an excellent reputation for the willingness-to-pay part. The U.S. has demonstrated a firm commitment to meet its obligations.

The ability-to-pay part, however, is showing some strain. It’s a question of whether, after deducting all the other costs of operating the government, there’s enough left over from tax revenue to cover interest on the Treasury’s debt.

The table shows that over the last five years, money available to pay interest on Treasury debt has fallen short of interest expense by an average of $2.2 trillion per year.

“What’s the big deal?” some may ask. “Scaremongers have been ranting about federal deficits for as long as I can remember, but the Treasury hasn’t yet failed on a single dollar of interest.”