Concept
Internal debt owed by a government (money a government borrows from its citizens) is part of the country's national debt. It is a form of fiat creation of money, in which the government obtains cash not by printing it, but by borrowing it. The money created is in the form of treasury securities or securities borrowed from the central bank.
These may be traded but will only rarely be spent on goods and services. In this way, the expected increase in inflation due to the increase in national wealth is lower than if the government had simply printed the money and increased the more liquid forms of wealth (i.e., the money supply).
Read more about this topic: Internal Debt
Famous quotes containing the word concept:
“The nearer a conception comes towards finality, the nearer does the dynamic relation, out of which this concept has arisen, draw to a close. To know is to lose.”
—D.H. (David Herbert)
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