Why can’t a government forgive it’s own internal debt?
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There are too many wrong answers. Here is the simple ELI5:
The US doesn’t “print” money by borrowing from itself to pay for things. Internal debt is money that is borrowed from investors to pay for things when there isn’t enough tax revenue. You probably know that at a low enough interest rate, borrowing can be preferable to paying for something up front. The US has the best credit in the world, so it gets the best rates in the world.
If I borrow money from you, sure, I can get away with not paying you back. If I do that, you either aren’t going to loan me money again or if you do, you will ask for something extra (much higher interest) to overcome your mistrust of me.
Higher rates are obviously bad for taxpayers but that’s just the tip of the iceberg. It affects investor behavior and the entire economy. This has happened several times because people politicians are slow learn their lessons. 100% of the time, government default has *immediately* destroyed the nation’s economy.
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