Why are most countries in debt, who do they owe, and what are the consequences? Why do they go into debt in the first place?
In: Economics
Government get most of their money from taxes but sometimes they need either spend money they haven’t gotten yet or spend more then they’re going to make. And because printing money is actually a really bad idea they borrow money.
The way they borrow money is by selling bonds, which is an IOU saying that the government will pay you back with interest if you buy it. Most bonds in the US are owned by the American people, usually in retirement accounts, or owned by the Social Security Administration.
There really aren’t consequences most of the time. It’s totally normal, and sometimes really good, to borrow money to help keep money flowing. It can become a problem if to much is borrowed but you can borrow a lot before it gets to that point.
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