Why can’t a government forgive it’s own internal debt?
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It depends what you mean by “internal” debt.
As a lot of people are saying, a huge amount of US debt is in the form of bonds or something like them that are held by people as part of their savings and retirement plans (sometimes indirectly but the idea is the same).
But some of the internal debt is between parts of the government. We don’t want to forgive those debts either because they represent a promise to move money around to the particular places it will be needed in the future, like the Social Security Trust Fund.
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