I just genuinely don’t understand how it works, like couldn’t you realistically just creat more money. Isn’t it just like a number in a bank account? Am I really dumb?
In: 4
If you were to take all of the world’s bank accounts and settle them, there wouldn’t be any debt.
However, a lot of debt is owned by private companies, investment firms, and even people. Think about how a loan works with a bank; they bank gives you a bunch of money upfront, and you pay them back a bit each month with a total payback greater than the money you borrowed.
Doing this to a big country/government is pretty good; it’s unlikely that they will stop paying you, because they rely a lot on borrowing, and if the government collapses, there’ll be a lot more problems to deal with than you not collecting (potentially now-worthless) money.
So the other side of a lot of that debt exists in a lot of private accounts that just aren’t visible to the general public. So while the US government may be in debt, there are a bunch of organizations/accounts that have a surplus that balances it out.
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