If the US Treasury sells/auctions bonds because their regular revenue (tax) already isn’t enough to fund the government, where do they get the money to pack back those debts?

Question

The only thing I can think of is that they pay old bonds with income from new bonds? Isn’t that a ponzi scheme?

Google talks about securities, bills, notes, and bonds. But I don’t really understand what those are.

In: 0

Answer 1

They pay old bonds with a combination of tax revenue and new bonds.

It’s not exactly a Ponzi scheme since it’s fully transparent, you can see exactly what they’re doing and they’re not pretending to pay you returns that don’t actually exist (the hallmark of a Ponzi scheme).

The fact that they keep issuing more bonds than they can repay from taxes is why the debt keeps going up.