The National debt is an accounting device. So is tax.
Treat me gently.........
So for a layman, I have sjb bonds to sell but no-one wants to buy them - so what exactly am I doing ( paying the interest quote above) ?
.sjb
if nobody buys them, there is no interest to pay. They are just bits of paper.
The national debt came about when the Bank of England was first created in 1694 (ish?). The BoE bought William III’s debts incurred because of his wars. The first point to notice is that the group of city traders and merchants who bought the debt, saw it as a money making opportunity, otherwise, why would they buy it? The “debt” became an asset. Part of the deal was also that the Bank of England bought the right to print paper money.
Paper money is no more that a ‘promise to pay’, bonds and securities are similarly, bits of paper with a promise to pay. But that promise is ultimately backed up by the governments ability to issue currency to meet that promise. Buying those bits of paper are a safe bet because the ‘promise’ is secure.
Speaking as a non-economist, actually, as someone who finds understanding such things quite difficult, I have found the book by Thomas Levenson
Money For Nothing The South Sea Bubble and the Invention of Modern Capitalism which covers the formation of the BoE and the South Sea Bubble in a narrative form that is easy to follow very useful. It sets out the role of people like Issac Newton who used maths to make predictions, and it is similar mathematical predictions that speculators in the city used to sell promises based on predictions of profits in the future. Those promises collapsed with the South Sea Bubble, but the principle, when backed by government promises, became the model for Modern Capitalism. It is well worth a read to see how things started out.
What the book demonstrates is that it is possible to create money from methods other than acquiring more gold or silver (or other commodities like slaves, or spices etc etc). The very promise to pay a profit in the future became a commodity
To bring us up to date, bonds and securities are paper promises, but that promise is built on the guarantee that government does not have to find money to pay out on the promise, it does so simply by pressing a button on a computer keyboard to issuing the necessary Great British Pounds into the appropriate bank accounts. The promise will be kept.