So in the UK the tories and media keep saying the national debt is the highest its been since the ww2 (which is true of pretty much any year since the 80s). And that we need to raise taxes, tighten our belts etc to pay back what we borrowed to get us thru the pandemic.
Now I know this kind of treating a countries finances like household finances and talking about national debt like its credit card debt is disingenuous and just used as a way to justify squeezing people more than they are already.
But what I don't know with enough authority to be able to talk to people about it is why this is the case? How is national debt different and wtf is it? Who do we owe it to and do we even need to pay it back etc?
Ofc I know the whole thing is bullshit anyway any only exists to preserve the current power structure but let's leave that for now.
Be good to hear thoughts from someone who knows things.
Governments sell bonds, which are debt obligations with either fixed or floating percentage government pays tied to its central bank rate. Usually these bonds have some end date, when the government is required to pay the underlying price. I.e. government wants to finance some shit, they say will sell 5 million 1000 pound 2040 bonds, with 1 % yearly. So for 20 years they will pay 10 pounds for each bond, and then in 2040 they have to pay full 1000 pound to these bonds holders. If they don’t, it’s called default. If government needs good will from capitalists, they should not default.
As bonds are being traded their price could lower, which simultaneously raises the effective percentage (yield) rate, but also signals some concern from capitalists. I.e. bond worth 1000 pounds in 2040 could be trading at 900 pounds, thus 10 pounds of interest/year is suddenly 1.12 percent instead of 1.
To tack onto this, people talk about "stocks and bonds" in financial portfolios. A bond is vaguely like getting dividends from a country.
Anyone can buy bonds, but it typically ends up being people who have lots of money and trust/alignment with the government. Some of the national debt is foreign-owned, but a lot of it is owned by the nation's own bourgeoisie. With national debt around 100-150% of GDP, it's common for over 10% of the government's budget to just go to paying interest on the debt- using public coffers to exclusively pay rich people. Unless the rich are disproportionately taxed, it's a wealth transfer from poor to rich. And you can't easily tax foreign nationals, so taxing the rich to pay the debt looks like a handout to other countries. This is why "just not paying the debt" is not an acceptable policy to the mainstream.