Why can’t a government forgive it’s own internal debt?
In: 2
The government is in debt to people, people like you and me, not itself. We hold government bonds and treasury bills, maybe not directly but through our bank and retirement accounts. We the people would be the ones to have to “forgive” that debt and we would bear the burden as individuals. Or they could just stop paying, called a default, and no one would trust the US Dollar ever again.
Edit for clarity: The government has basically two ways to get money. One is through taxes. The other is through selling debt to people like you and me as described above. Debt is slightly more popular from a political standpoint because it makes the government look incompetent vs raising taxes which makes it seem tyrannical.
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