It’s a complex topic, but national debt is not the same as debt a person or even company would have. It’s by design. How it’s managed is another thing and where things go wrong.
Yeah, basically every government in the world has some debt that they just keep perpetually refinancing to have additional cash on hand. It’s not a problem until you have other stuff go wrong (e.g. natural disaster, economic slowdown, lose a war, etc.) and your creditors get nervous, in which case it can become a real big problem really quickly,
But still, you’re arguably just wasting your government’s power by not using debt/deficit spending, because government debt means paychecks for government workers or contractors and infrastructure or other services for your citizens that can effectively pay for themselves in the long term
e; the punctuation was somehow even worse previously
Keeping it very simple:
The government sells tickets for which buyers pay $100. If the 10-year treasury bond rate is 10%, tickets can be turned in after ten years to get $110. If the government uses the $100 they get at the start to build something which allows them to collect at least $110 in taxes, (things like infrastructure to enable commerce, or educational spending to increase personal income, etc.) it covers its costs. There are complexities but this is the boiled down version of how many government activities are funded through debt.
As for who is owed the debt, it’s whoever holds the tickets. They can be bought and sold at will so investors trade them regularly. They are generally the low-risk/low-reward option for investment because they don’t usually pay a great rate, but will only be a loss if the country itself collapses.
It was created intentionally, by taking out loans. Some of these loans are owed to her own citizens, in the form of bonds. Others are loans taken from business and even foreign states. In the lattermost case, the debt creation is the benefit even more than the funds received; a nation that is owed a large sum by the US now has an interest in keeping the US around so he can repay that debt.
The US has not historically had a problem paying her bills. It is a constant concern to make sure this continues to be the case, however.
Blackrock, state street, vanguard and the parasite class who own them
it’s bills
I think it is bills.
The short version is that debt isn’t always bad.
A lot of things make money into more money, whether it’s a market investment, a business, or even a lucky gamble. They can fluctuate, but the ones that stick around typically return a reliable percentage.
A debt is generally money that you get to have and use, but probably have to pay interest on.
If you have a reliable way to turn money into more money at a specific rate and that rate is higher than the interest rate on your debt, then that debt is a wise decision to take on.
The reliable way in this case is printing money aka inflating your currency.
Debt can be useful, if you do useful things with it, things like building infrastructure, winning a necessary war, even student loans or for that matter free tuition and healthcare in general.
Debt taken on to extend your other debts coming due because you’re perpetually stuck in a negative income loop due to your poor national budget policies?
No. That is not useful debt. That is a death spiral, and it’s one that’s been created as a deliberate strategy.
Well one could argue that the US started the debt for good reasons. But yes, right now, the debt is bad because it’s funding genocide, supporting child torture, and enriching pedophiles.
Quick and dirty version. Governments create bonds, which is kind of like the opposite of a loan. It’s a request for money, and in exchange they agree to pay what you give them back with interest. Then they shop around for people to throw money into the bond. That money is then used to pay for government services, equipment, facilities, etc. and taxes are collected to pay out the bond. It’s a bit more complicated but like I said, quick and dirty version.
The general idea is you get a lot further asking people to float you a loan than you do hoarding gold or something to try to scrape together enough money to do big projects, and people aren’t going to revolt or rob the treasury for a stack of unpaid loans.
Who does the state owe the debt to? Lots of people. Mostly rich Americans but also foreign investors, other governments, retirement funds, etc.
Does the US have a problem paying its bills? It didn’t always, but in recent decades, yes.
The US can always pay its bills because it can just print more money.
I mean, technically yes, but also, that’s kind of a bait and switch scenario. You’re honoring the debt, but what you received is worth less than implied, which means most people are going to think twice about buying bonds again.
U.S. bonds already pay more interest than Greek bonds. The dollar devalues every single day from the printing of more money.
You really don’t understand how money works do you. If you want to get technical, private banks print more money than the fed.
I understand that quite well. No reason to call me stupid asshole.
The amount of money being printed has almost nothing to do with inflation (ie. the dollar losing value). As long as it’s balanced and kept in tension by a relatively responsive interest rate, it doesn’t really do much. Big, sudden floods of cash one way or the other make a lot of disruption (like QE after the recession, or COVID checks), but that’s actually pretty rare.
You made a silly comment that sounds more like someone who listens to corpo media than someone who understands economics. How am I supposed to know what you do or don’t understand at that point?
Fedi is social media. Not an official repository of knowledge whereupon I have to provide only the most accurate of statements. Presuming I’m stupid because you don’t like a comment is not justified. If it was, then I could insult you for claiming that expanding the money supply doesn’t cause inflation. Or claiming the government has no role over the money supply. What do you think happens when the US lowers reserve limits for banks? That is rhetorical. Not an invitation for further discussion.
Does the US have a problem paying its bills? It didn’t always, but in recent decades, yes
I don’t think there’s been a default yet. That would be a huge deal.
No, but playing debt-ceiling chicken every few months isn’t a good sign.
We are in debt to ourselves.
The debt is created selling government bonds, which are basically iou’s. People buy them as investments, you might have some if you have a 401k or Ira. The U.S. currently has a decent credit rating.
