Where does a country gets money to fund its deficit?
In: Economics
Bonds. Most governments will auctions bonds, which are usually contracts that say “buy this contract for me now, and I will pay you X amount in/over Y time”. For example, the US Treasury may issue a bond that pays $100 in 30 days and puts it on auction. Investors, which can be from all over the world including individuals, retirement funds, investment banks, other governments, etc, buy the bond on the auctions. Usually the bond sales for less than its nominal value, so a $100 US Treasury bond may sell for $99 at auction. So now, the government has $99 cash to spend and must pay out $100, usually through a combination of taxes and new bonds.
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