• 0 Posts
  • 5 Comments
Joined 1 year ago
cake
Cake day: June 10th, 2023

help-circle

  • People really don’t understand how debt works for governments. This is not a personal credit card. Governments can actually make money off having debt if it’s done properly.

    Government spending goes into the economy, it stimulates a ton of different people and industries. Those entities are then taxed, and if the stimulus improves the industries, the taxes can actually be more than the cost of the interest. Even just paying a ton of government employees pumps money into the economy that they spend to buy all sorts of goods and services.

    On top of that, inflation makes interest on government debt easier to pay off. The government issued trillions of dollars of that debt at stupidly low interest rates over the last decades, and now they’re collecting taxes on much higher incomes to pay it off.

    Tl;dr It’s not as bad as it seems because economics gets complicated at that scale.