What is public debt ?

Factual Questions
1

It didn’t post, so i’ll ask here in the reply

Ok, I know that public debt is when the government borrows money. It borrows money because it sometimes spends more than it collects money.

The real questions are:

1-from whom does it collect the money?

2- Why is it called public?

3- Who has to repay it?

4- Does the gov really needs to repay it? What’s the big deal if the gov doesn’t pay it at all? $12bn, $50bn or $1000000bn what’s the difference? nobody is going to starve

2

  1. The government collects money by taxing the people. Usually this isn’t enough money to do everything the government wants, so it borrows more money by selling bonds. Selling a bond just means taking out a loan. The bonds can be bought by banks, investment funds, individuals, foreign countries, and anyone else who is confident that the government will pay the money back.

  2. It’s called public because things that the government does are (theoretically, at least) for “the public.” The government is elected by the public, the public decides which policies it likes, and the government performs functions for the public.

  3. The government has to repay the debt.

  4. If the government defaults on the debt, then no one will loan the government any money. The government must have a good credit rating to get a good loan, same as everyone else. The government pays the interest and principle on loans with tax revenue and by taking out new loans. If they stop, then they won’t be able to take out new loans, which means they won’t be able to finance those huge public projects, which means they won’t get done, which means the government collapses, the world descends into chaos and anarchy, and we are all imprisoned by dark alien overlords and fed to the apes. (Also there will roaming hordes of barbarian midgets.)

3

>> 3. The government has to repay the debt.

Quibble: The country is who borrows and repays. Governments can come and go but the debt remains.

>> 4. If the government defaults on the debt, then no one will loan the government any money.

Quibble: I know “loan” is in common use but I believe the correct verb is to “lend” as in “no one will lend the government any money”.