How are all the deficits, debts and loans of a nation tracked, and do they know the exact balance?
I might be very naive to how all of this works.
In: Economics
In the US, the national debt is measured as the face value of US Treasury securities issued. US Treasury securities are effectively loans taken out by the US government used to finance current spending, i.e. fill holes in the budget (the budget deficit).
The budget deficit for any given year is the amount, if negative, of government revenues minus government spending. If positive, this number is referred to as a budget surplus. A budget surplus would allow to government to reduce the national debt.
The national debt can be thought of as the cumulative budget deficit of the US government.
Well every borrower must be matched with a lender. The borrower might like to conveniently forget how much they borrowed but the lender is definitely not going to be of the same mind.
Most countries, companies maintain sets of accounts. The most common fundamental approach to accounting is a double entry system. So everyone maintains their records that show how much they borrowed, lent, paid, received, imported and exported etc etc. Although this is a lot of information, it is possible to track debts, expenses, income etc fairly accurately.
The same as how all other wealth is tracked.
Stating how much money or debt one has is directly related to how much money they invest in financial wizards to give you those figures.
If one doesn’t invest in good financial wizards, then they are liable to get caught in some strange money scheme or have all their hidden debts exposed.
If they invest heavily and carefully on the number and skill of really good financial wizards, then you could literally maintain a failing company (or even an individual millionaire or billionaire) without anyone ever knowing.
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