It seems that most if not all advanced economies (US, Japan, UK to name a few) have been running budget deficits since basically the last 20 years. I understand that current debts lose value over time because of inflation and economies grow, but how can they do this for basically ever? I can’t wrap my head around the maths that makes this possible, and the markets don’t seem all that worried
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A government deficit means government spending is greater than government revenue. A government can make up the difference by borrowing money.
Whether a person lends money to the government depends on the interest rate and likelihood of getting paid back. The government can borrow money as long people trust the government will pay back the loan.
If the government can borrow money, then the government can run a deficit.
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