From whom do governments borrow money?

[billyskank]

Serious question, I have been wondering.

[ghostsofgiants]

1. Other governments. A lot of the U.S. governmental debt is money borrowed from China, I believe.

[billyskank]

2. So are some nations creditors? They have no debt?

Or do some governments routinely budget for lending other governments money?

[ghostsofgiants]

3. Good question, I'm not entirely sure about that.

[insanity]

6. I can't think of any

Every nation incurs a little bit of debt.

[puerco-bellies]

4. They issue redeemable bonds, then pay interest to the purchaser.

This is a salient, intelligent question posted in the lounge.. Are you lost?

[billyskank]

7. I'd have asked GD if I wanted a flame war

Generally I find more intelligent discussion here than there. :)

[insanity]

5. It's umm, complicated.

There are lots of ways a government can incur debt. External debt is usually treasury securities that we sell.

[billyskank]

8. What does that mean, to sell treasury securities?

I figure it is about time I found this stuff out.

[AlCzervik]

9. Usually T bills and Bonds.

[billyskank]

10. Lemme get this straight.

When you sell a bond, that means somebody gives me money in exchange for a promise that after x amount of time, I will give them back their money in full plus y percent interest?

[AlCzervik]

11. yes.

[billyskank]

12. Thanks.

[puerco-bellies]

13. Correct. The purchaser buys a bond, usually for face value i.e. $100,000

The bonds usually have what is called a coupon, or an interest rate attached to them tied to the prime rate. As interest rates rise and fall the bonds pay more or less. U.S. bond USED to be considered the safest because of the strength of the dollar, and that the U.S. Government has yet to default on a bond, interest or principal. When a government or corporation issues a bond or note that is debt, owed in interest to the bond or note holder, for both coupon, and principal. That is the primary way the federal government borrows long term debt.

[madinmaryland]

14. They just print more if they need it!!!

:rofl:

SERIESLY!!!