How does country debt work if the country prints its own currency (ex USA). Why are people so concerned about it?
In: Economics
The debt they owe is to other countries. Printing your own currency doesn’t give you more buying power, it only distributes the same buying power among more dollars (and puts slightly more of it in the hands of the government but that’s minor in this discussion).
Example, if I have 10 notes on it and each says “1 toy car” on it, and I have 10 toy cars, each note is worth 1 toy car. Now say I make another 10 notes, but I still only have 10 cars. Now I have 20 notes but only 10 cars, so each note is now only worth half a car (I need to spend 2 notes just to get 1 car). That’s called depreciation.
Printing more money gives you more dollars, but each dollar has depreciated in value, so all the dollars you haf before plus all the new dollars still have the same total value as just the dollars that you had before.
We are concerned about national debt for same reason we are personal debt. Any money we owe, we also owe interest on. So we owe more money on the money we already owe. This is fiscally bad as interest paid is just wasted money; money spent while getting nothing in return.
Edited to include why we are concerned
Edit2, typos.
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