US National Public Debt Essay

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The national debt is the result of a state's borrowing from its population, from foreign governments, or from international institutions such as the International Bank for Reconstruction and Development. Public debts tend to be large-scale credit operations and are contracted on a national scale by central governments and on a lesser scale by provincial, regional, district, and municipal administrative bodies. In the U.S., public debts are also contracted by the states and by local governments, primarily for public works.

Kinds of Debt
National public debts are contracted chiefly through the flotation of interest-paying loans, in the form of bonds, bills, or notes. Historically, these loans have been undertaken to raise money for wars
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Although government loans are for the most part not secured by physical assets, they are regarded in law as contracts carrying an obligation on the part of the debtor to repay. Nevertheless, governments, when hard-pressed during economic crises or as a result of political upheavals, have sometimes repudiated their public debts in whole or in part. In many cases, also, a government to whom another is in debt may agree to forgive the debt or reschedule its payment over a longer period.

History
In earlier times debts contracted by heads of state had the legal status of personal debt; public debt emerged as a systematic element in a country's economy when regular sources of income became available to provide funds to repay loans, a monetary system became fully formed, and an organized money market came into operation. The first examples of public debt surfaced in the late 17th century in Europe and became more prevalent with the rise of the modern state and the banking and credit system that grew out of the Industrial Revolution.

Today, the finances involved in contracting and redeeming the public debt of a country are a sizable proportion of its government budget. As the money for redemption of the public debt is raised principally through taxation, the size of the national debt is a factor in determining taxation rates.

National public debts, taken on a world
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