I keep reading how in the UK it’s poor economic literacy for Rishi Sunak to use personal borrowing as an analogy for a country borrowing money. I’ve tried to read about it but I just get confused on the details, economics is just not a strong point. The credit card maxed out is easy to relate to just with bigger numbers, but I understand things don’t translate when going from small to big but I just can’t get my head around why in this instance.
In: Economics
The difference is that with a credit card, you’re just paying off the amount that you would have owed to begin with, or you’re putting yourself in debt over things that won’t improve your life.
When a company or country takes on debt, they are doing it with the intent of expanding their operations, their infrastructure, creating new opportunities to generate new wealth.
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