Apparently, the U.S. government run a national debt. . . it is and how does that work?
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4 answers
rastafari
February 9th, 2010 at 11:57 pm
I don’t know but they say it’s steady rising…
thatguyoverthere
February 10th, 2010 at 12:12 am
The US borrows from foreign countries more than it lends out, thus we owe money to those other countries.
I believe in the 1980’s Japan owned a huge portion of our mortgage markets.
Paul B
February 10th, 2010 at 12:50 am
80% of spending is social programs so we owe it to ourselves in that we spent it on goods and services roads, education, war…. The ten trillion is what is actually owed in dollars the actual liability of the US is in excess of 50 trillion.
hobbit
February 10th, 2010 at 1:23 am
Suppose a government wishes to build a road, waterworks, a canal, a dam or something like that. The theory is the project is going to last several years and the government does not have ready cash to support pay for it now. So a bond is issued. A bond is basically a promise to repay the amount borrowed in a number of years. Since no one is going to lend $10,000 (or 10 million or 10 billion) today to get the same amount back in 10 years, there is also a stream of interest payments which are usually paid twice a year.
Sometimes(all too often it seems) governments also have to borrow to pay current expenses such as social security, wages, maintenance police, fire and military and so forth. There is a fervent hope that revenues will rise in the future so those expenses are easier to pay. If nothing else perhaps the other guys will be in and we can blame the mess on them.
Obviously this can go on for a while (sometimes a very long time) However nations can and do go broke. What happens then is ugly.
Hyper-inflation, wars, depressions,
This is simplified (a lot) but it gives the basic idea