I recently saw that the US has $12.1 trillion in intragovernmental debt – more than 1/3 of the total debt. I’m struggling to understand why this debt even exists? If it all comes out of the same national budget then why isn’t just considered a reallocation of funds?
In: Economics
Sometimes agencies will have an overage of funds and will lend those funds back to the Treasury; this way, they don’t lose the money, are able to gain a bit of interest, and the government has a ready lender.
Social Security is the best example of this. When they had a surplus, that money would otherwise just sit around doing nothing. They lent it back to the government (one of the safest investments there is) and increased the funding a touch thanks to interest payments on that debt.
Remember that Social Security **isn’t** funded from the normal national budget. It is a separate, special tax that goes exclusively to that agency.
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