4 ms·

Why do nations borrow?

• peterfirefly 11y ago
  Easier vote buying, usually.
• chvid 11y ago
  Because people want to save.
  • nhaehnle 11y ago
    Thank you! I realize that you probably imitated GP's short style on purpose, but to elaborate a little bit: It's an accounting tautology that every (monetary) savings must be offset by a debt somewhere. Since private households tend to save (and we should consider that a good thing, given how available savings is an essential part of freedom within a capitalist system), the debts have to be somewhere else. They could be debts of firms (for investment), but the private sector is exposed to (sometimes severe) economic fluctuations. So a buffer is needed somewhere, and the logical place for this buffer is government debt.
• hhandoko 11y ago
  I assume this is a serious question. I suppose the simplest answer is: to increase your spending (ability) right now, with the expectation that after the debt has been paid off you will be achieve a net positive value. A small business might borrow to buy expensive equipment which will enable them to offer additional service, or to access other market segment. Along a similar line, a country might borrow to accelerate their growth (e.g. investing in infrastructure projects).