People really don’t understand how debt works for governments. This is not a personal credit card. Governments can actually make money off having debt if it’s done properly.
Government spending goes into the economy, it stimulates a ton of different people and industries. Those entities are then taxed, and if the stimulus improves the industries, the taxes can actually be more than the cost of the interest. Even just paying a ton of government employees pumps money into the economy that they spend to buy all sorts of goods and services.
On top of that, inflation makes interest on government debt easier to pay off. The government issued trillions of dollars of that debt at stupidly low interest rates over the last decades, and now they’re collecting taxes on much higher incomes to pay it off.
Tl;dr It’s not as bad as it seems because economics gets complicated at that scale.
Yes you can. A debt ceiling is just when you say “I don’t want to borrow more than 10k”. Raising the debt ceiling is when you go “eh, 11k is fine too”.
The debt ceiling is not some kind of market cap where the state is unable to get another loan, it’s entirely self-imposed.
You’ll die. In 50-70 years you’ll be sleeping in a grave, while there is a good chance that the US (or Germany/France/China) will still be around. Even though a couple of countries have multi-generation mortgages (looking a your switzerland) most bank won’t lend money to people if they think they’ll die before paying pack. It’s less an issue with governments. Well if we look at history, every 100-200 years, there is a moment when a country stop paying their debt, best case they throw the bankers in jail and seize their goods, worst case they do economic reform and punish their own citizen. but it’s still way safer than lending money to a person/company.
That said, public debt is still a potential issue, the era of negative interest rate is over and these interest are part of a country budget. Moreover, i am always weirded out when the state take poor money it’s called taxes, but when they state take rich people money it’s called debt and we give them interest.
Finally, even though everyone know that at a point any government will either declare bankrupcy, have inflation, or a revolution to cancel the debt, the risk over a few years (to take typical treasure bonds is still very low. My money is safer in public debts of almost every country than on stock of a large company)
People really don’t understand how debt works for governments. This is not a personal credit card. Governments can actually make money off having debt if it’s done properly.
Government spending goes into the economy, it stimulates a ton of different people and industries. Those entities are then taxed, and if the stimulus improves the industries, the taxes can actually be more than the cost of the interest. Even just paying a ton of government employees pumps money into the economy that they spend to buy all sorts of goods and services.
On top of that, inflation makes interest on government debt easier to pay off. The government issued trillions of dollars of that debt at stupidly low interest rates over the last decades, and now they’re collecting taxes on much higher incomes to pay it off.
Tl;dr It’s not as bad as it seems because economics gets complicated at that scale.
I can make money off of debt as well, but I can’t raise my own debt ceiling. Can someone help me understand why?
Yes you can. A debt ceiling is just when you say “I don’t want to borrow more than 10k”. Raising the debt ceiling is when you go “eh, 11k is fine too”.
The debt ceiling is not some kind of market cap where the state is unable to get another loan, it’s entirely self-imposed.
You’ll die. In 50-70 years you’ll be sleeping in a grave, while there is a good chance that the US (or Germany/France/China) will still be around. Even though a couple of countries have multi-generation mortgages (looking a your switzerland) most bank won’t lend money to people if they think they’ll die before paying pack. It’s less an issue with governments. Well if we look at history, every 100-200 years, there is a moment when a country stop paying their debt, best case they throw the bankers in jail and seize their goods, worst case they do economic reform and punish their own citizen. but it’s still way safer than lending money to a person/company.
That said, public debt is still a potential issue, the era of negative interest rate is over and these interest are part of a country budget. Moreover, i am always weirded out when the state take poor money it’s called taxes, but when they state take rich people money it’s called debt and we give them interest.
Finally, even though everyone know that at a point any government will either declare bankrupcy, have inflation, or a revolution to cancel the debt, the risk over a few years (to take typical treasure bonds is still very low. My money is safer in public debts of almost every country than on stock of a large company)
You don’t have the ability to inflate your currency with money printing in case of an emergency.