Why can’t a government forgive it’s own internal debt?
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That’s the same as defaulting. Going broke and not paying off debts.
Ok, all the latest talk about forgiving student debt means the government literally doesn’t get paid back all the money it loaned out to students. They’re the US federal government though, they’ve got huge pockets and if push comes to shove they can just print more money. In no uncertain terms though, the US federal government would not be receiving that amount of wealth from all these students with debt.
The Internal debt you’re talking about is between organizations or levels of government. Between states and the federal government or cities or other organizations within any of those layers of government. Bonds are just loans that the lender chooses to go make.
If the state of Wyoming owns a $1K bond of US federal debt, they have that because they’re expecting to cash in… $1,050 next year or whatever. They expect that extra $50 next year. That’s why they bought the bond. If that loan is just forgiven like the student loan debt is forgiven, then the state of Wyoming just got screwed out of $1K.
The feds and the state do different things. Feds fund the military, states maintain the roads, cities fund schools. Mostly. If the states get screwed out of money, roads aren’t going to get maintained, but the military will have an easier time buying more stuff.
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