What is a country's debt composed of mostly?
What does it mean when you hear of a financial entity "buying a country's debt"?
Is this the same kind of as China purchasing many government bonds of the US?
How does another country or bank collect what is owed?
Answer:
Countries can borrow in one of two ways. They can either go to foreign banks or groups of private investors and take out loans, or they can issue government securities (IOUs).
In your example, the US government issues government debt securities each week. Many countries see this as a very safe investment. The Chinese are essentially chosing to invest in the US rather than in their own country!
1.Debts are based on the trade of many goods and/or services.
2.Another country or institution can assume or "take over" this debt.
3. U.S. Government bonds are a sound investment, the world can see this; small but sound.
4.Usually some form of trade (i.e. g &/or s).Land, labor, natural resources, foods etc.
money owed
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Is this the same kind of as China purchasing many government bonds of the US?
How does another country or bank collect what is owed?
Answer:
Countries can borrow in one of two ways. They can either go to foreign banks or groups of private investors and take out loans, or they can issue government securities (IOUs).
In your example, the US government issues government debt securities each week. Many countries see this as a very safe investment. The Chinese are essentially chosing to invest in the US rather than in their own country!
1.Debts are based on the trade of many goods and/or services.
2.Another country or institution can assume or "take over" this debt.
3. U.S. Government bonds are a sound investment, the world can see this; small but sound.
4.Usually some form of trade (i.e. g &/or s).Land, labor, natural resources, foods etc.
money owed
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