General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsSo here's the cool thing about being a nation-state.
Debt, once acquired, does not need to be paid off, ever. Period.
I hope you guys get that. We have $17 trillion right now; the USG will probably never have less.
Nuclear Unicorn
(19,497 posts)Who would lend you money if they will never get paid back?
Recursion
(56,582 posts)Perpetually, on time.
Even so, the debt is not paid down. Nor should it be.
Nuclear Unicorn
(19,497 posts)Assuming you meant people lending to the government via treasury bonds, etc. if debt service exceeds tax receipts then lenders will get paid pennies on the dollar. No one buys bonds to lose money so the ability to borrow crashes(along with any government provided services that were dependent upon borrowing).
Recursion
(56,582 posts)Good point.
Spider Jerusalem
(21,786 posts)the government, or its central bank, issues bonds, Treasury bills, gilts, and so on...various debt instruments, paying a fixed percentage per annum and maturing in a fixed term (usually, 10 to 20 years). The whole of the principal and accrued interest is then due; in practice what usually happens is that these loans are effectively refinanced by being rolled over into new bonds/T-bills/whatever, because as long as the government honours its obligations and meets the schedule of interest and repayment it's seen as a low-risk investment. If there's a default, though? Then that low-risk investment becomes high-risk and financing deficit spending through debt becomes much harder if not impossible. It doesn't need to be paid off, but not meeting obligations has negative consequences. (See: Greece.)
Recursion
(56,582 posts)You are confusing the debt for its instruments.
Spider Jerusalem
(21,786 posts)But failure to meet the schedule of payments means that at the next auction of 10-year Treasuries there are fewer buyers. The perpetual-motion debt machine can't function if creditors aren't willing to take the risk of buying the debt of a government that may not keep up its end of the bargain.
Recursion
(56,582 posts)But currently that's cheaper than literally holding cash.
Bunnahabhain
(857 posts)Debt is always more expensive than holding cash.
uponit7771
(90,364 posts)...rich people because 30 years ago someone said giving a lot of the countries resources to the rch was good and will benefit the middle class
LondonReign2
(5,213 posts)IIRC, Clinton actually used a small part of the surplus in his last two years to either reduce the debt or schedule a debt reduction. The amount I believe was relatively small -- $225B sticks in my mind-- but still quite the improvement from where we are now. Ah, the good old fiscal days. Think where'd we be if Shrub hadn't gutted taxes while starting unfunded wars (and if Obama had simply let the tax cuts expire).