> Why does government debt equal private assets? Not that I fully agree with his assertion, but: Gov't debt usually takes form of `bonds'. Such bonds are issu

> Why does government debt equal private assets? Not that I fully agree with his assertion, but: Gov't debt usually takes form of `bonds'. Such bonds are issued for fixed terms and traded on free market. Both private and institutional investors (including other countries) invest in bonds, thus some of gov't debt will normally be in hands of private investors. Government bonds are considered highly secure and reliable means of investment, if somewhat low-yield. That allows the issuing country to rely on bonds for matching income to expenditures any time it needs to, at rather low cost. Should a country declare bankruptcy, or just near it, this instrument is much harder to use for the govt. Consider having a look at http://en.wikipedia.org/wiki/The_ascent_of_money http://en.wikipedia.org/wiki/The_ascent_of_money which covers the topic pretty well.