Authors Tony Yates

7 days 30 days All time Recent Popular
OK, I'll bite. This is an excellent question, not just a genuine one.


There is not a mechanism in place to write off most of each other's debt. There doesn't need to be.

Not all governments are borrowing, for starters. The ones that are are borrowing from their citizens, and foreign citizens, who have stuff to lend.

These are probably mostly the rich, the middle aged, who are saving, and will accept government IOUs, and the old, who have piles of assets and are ok with more of them being in government IOUs, for now.

You can tell that this isn't a problem yet because there is plenty of demand by those who have savings to swap them for government bonds as they get issued, as the bonds trade for a high price [very low interest rate].