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The government needs to be in debt to a certain degree. Debt is a zero sum game: If someone is saving, then someone else needs to make debt. Private house holds
by tsss 6y ago
The government needs to be in debt to a certain degree. Debt is a zero sum game: If someone is saving, then someone else needs to make debt. Private house holds are always saving, they can not make debt. That leaves private companies, the government and foreign countries. Often private companies are also reluctant to make debt if times are not good, so the government has to invest to keep the economy from grinding to a halt. Some countries like Germany manage to save in all sectors, but this only works because they export their debt to other countries like Greece, which is unsustainable and ultimately caused the euro crisis.