80% of government “debt” is actually in the form of bonds. People voluntarily give the government more money than they’re required in taxes because they believe the government will be strong enough to pay them back interest later. The government does not have to pay down all that debt because the bonds are being cashed out at a predictable rate and people are buying new bonds all the time, so the new bonds finance the old ones.
For example, someone in 1995 buys a series EE bond at $100. It’ll be worth roughly $200-215 now, which is 30 year maturation. But due to inflation, $100 in 1995 is worth $212 today. So even though the US government paid out over $100 in interest, due to inflation it was basically a wash, and they had 30 years to invest that money in infrastructure. Meanwhile, since $100 is not worth as much now, people in the same social class are likely now buying $200 bonds, so really the US is on the hook for the last $15 or so. In short, this “debt” was actually a good deal for the US government.
The short version is the government is fine as long as it can pay the interest on its loans without needing to print so much money to do so that it causes hyperinflation. You don’t have the ability to do that with your personal debt.
80% of government “debt” is actually in the form of bonds. People voluntarily give the government more money than they’re required in taxes because they believe the government will be strong enough to pay them back interest later. The government does not have to pay down all that debt because the bonds are being cashed out at a predictable rate and people are buying new bonds all the time, so the new bonds finance the old ones.
For example, someone in 1995 buys a series EE bond at $100. It’ll be worth roughly $200-215 now, which is 30 year maturation. But due to inflation, $100 in 1995 is worth $212 today. So even though the US government paid out over $100 in interest, due to inflation it was basically a wash, and they had 30 years to invest that money in infrastructure. Meanwhile, since $100 is not worth as much now, people in the same social class are likely now buying $200 bonds, so really the US is on the hook for the last $15 or so. In short, this “debt” was actually a good deal for the US government.
The short version is the government is fine as long as it can pay the interest on its loans without needing to print so much money to do so that it causes hyperinflation. You don’t have the ability to do that with your personal debt.