how can a country be in debt?
In: Economics
The country borrows the money.
For example, investors compete to loan the US money, because it’s very desirable to loan money to the US government. This is because the US has a huge economy, so it can pay you back when other folks can’t. Investors bid for the right to loan the US money, by offering lower interest rates than their competitors. In a recent auction, 2 year treasuries sold for 0.16%, a record low. Until Early this year, rates below 1% were not allowed, but the demand drove the US government to change the bidding system to allow even smaller numbers.
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