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Government debt is typically measured as the gross debt of the general government sector that is in the form of liabilities that are debt instruments. [2]: 207 A debt instrument is a financial claim that requires payment of interest and/or principal by the debtor to the creditor in the future.
If the individual citizen or corporate citizen is a creditor of the state (e.g. government bonds), then a default by the state can mean a devaluation of their monetary wealth. In addition, the following scenarios can occur in a debtor state from a sovereign default: a banking crisis, as banks have to make write downs on credits given to the state.
Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor.Debt may be owed by a sovereign state or country, local government, company, or an individual.
Pre-existing is the important term here, as it indicates that the government needs new financing, i.e. more loans, in order to pay long-standing debt. Government debt is used to pay for things ...
A debt limit is a cap set by Congress on how much money the U.S. government can borrow. Because the government spends more money than it collects in tax revenue, lawmakers need to periodically ...
The government needs to borrow money to continue paying out what Congress has already approved, but the debt ceiling puts a limit on how much money the U.S. government can borrow to pay its bills.
A charge-off or chargeoff is a declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors make this declaration at the point of six months without payment. A charge-off is a form of write-off.
The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as “the failure to make a payment when due.” [74] Many scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt.
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