Is public debt the money the government owes us (the citizens) or ?
In: Economics
The US sells bonds which bring in money today for government spending. Those bonds are bought by all sorts – banks, insurance companies, pension funds, foreign governments and investors. Those who bought the bonds are entitled to interest payments and full repayment of the bond value in the future. US government bonds are considered the safest investment out there so the government can’t even entertain the thought of not paying them back or the interest rates will go way up. And interest on our debt is around 10% of government spending. If interest rates went way up it would eat up much more of the government budget.
Our national debt is the sum of all those bonds outstanding we pay interest on and will someday need to pay back. In practice, we just sell more bonds when the old ones come due for repayment.
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