Government

The Difference between Public and Private Debt

A Longer form response on this issue in summary

– All government debt is not used to pay for infrastructure, and often paying for things with no return

– Governance of Public institutions are more political with more fragmented interests that a private institution leading to worse usage of capital from debt

– Government unlike private institutions doesn’t pay back its debt once its investment matures but rolls it over so when rates do rise, it’s super problematic

– Makes it hard monetary policy authorities to raise rates when they need to forcing them to choose between a budget crisis and inflation