All Governments, no most governments have a deficit in their income as opposed to their outgoings. Income comes in the form of taxes paid by you and I. The government then get's to use that money to fund public services. If the money coming in is not sifficient to cover their spending then they, like you and I have to borrow to fund those services. That is where the debt is from. When they borrow they have to pay it back to the institutions they have borrowed from plus interest. There are a few Countries who have virtually no debt and can easily fund all of their services and still lend money to other countries. China being one of them. Both Britain and the US have massive deficits and will probably never pay the debt off until they get public spending under control and stop borrowing to fund the spending.
National Debt is what those in charge of us decided we needed to borrow and spend to make the country run. It definitely wasn't in the people's best interest and will be our largest disaster in US history. Until they stop spending without plans for paying back we will be forever indebted!
The National Debt is often confused with the (Annual) Defitcit. The deficit is the amount that must be borrowed yearly to pay for government expenses. The national Debt is the accumulated debt of all government borrowings over time that have not been repaid. Almost all of this is financed by bond sales. The United States is having no trouble financing all the bond sales at very low interest rates. Some European countries with high debt problems and long term deficits are forced to pay high interest rates to sell their bonds.
Some of the government debt is backed by loans made directly by the government with borrowings. FHA home loans, USDA farm loans and various other direct loan programs actually are assets that could be entered on the government balance sheet. There is no government balance sheet like a corporation. All the public lands would also be assets. Varous types of bonds are issued to fund these loans. Any bonds, including savings bonds are debt to the government, though they are assets to the bond holder. Government lending is only a small part of the National Debt but many of these loans are 30 or more years and would be shown a government debt well into the future.
Some US elected officials are not worried about the rising US National Debt but the good US debt rating hangs by a thread. The bond rating companies can downgrade US debt as happened last August and eventually, the government would have to pay higher interest or even balance the budget.
The US has the strongest military in the world which helps keep interest rates low even as the US debt takes up more and more of the Gross Domestic Product. The GDP is the value of all the goods and services produced in the country. the problem is at some unknown point where the National debt gets too large, faith in a country's bonds will collapse and a depression will occur. Nobody knows when or how soon.
Money borrowed by the Government from time to time and not yet paid back. It usually consists almost entirely of debts incurred to carry on wars.
by Flightkeeper7 years ago
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What is the government doing to pay off the national debt? How is it being paid off?
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Is there anyone reading who can explain the global economic crisis simply and objectively in just a few paragraphs? When I try to find information to understand what's going on with the Euro and with the US economy,...
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