I cannot get my head around it, what is it? I have heard it is not like debt we go into, who are the government in debt to exactly? And what are the consequences of not paying said debt? Could another country claim our assets or something?
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The govt can sell stuff like bonds (and prob a bunch of other stuff I don’t know about) that they pay back with interest.
They’re in debt to holders of such assets. Could be individuals, corporations, other countries, etc. Whoever wants a “safe” investment vehicle for their money.
The consequence of not paying it back is a lack of faith in your bonds. Like if I buy bonds and the govt doesn’t pay me back with interest I’m not buying that again. And no, I can’t like claim I own the United States govt now.
Govt debt is a lot different than personal debt. For one, the govt can print money and simply pay it back whenever they feel like. And you may say “wait! Inflation”. And look, I didn’t say there’d be no consequences to that I said they could legally do it. If you printed money to pay your credit card bill you would go to jail. If you stop paying your mortgage the bank takes it back eventually.
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